PPIB-IPPs meeting remains inconclusive

A scheduled meeting between the Independent Power Producers (IPPs) and Private Power Infrastructure Board (PPIB) on Monday remained inconclusive as the latter conveyed that it has no authority to promise anything without the Ministry's prior approval, well informed sources told Business Recorder. No official from the Ministry of Water and Power attended the meeting.
The government, sources said, is in no mood to pay more to the IPPs in addition to what was paid last year, after the private sector power generation plants served sovereign guarantee notices in accordance with Power Purchase Agreements (PPAs). Ministry of Water and Power has paid Rs 30 billion to IPPs raised from the commercial banks in the name of Central Power Purchasing Agency Guaranteed (CPPA-G) against their demand of Rs 52 billion. Finance Ministry also exempted the payment from some legal codal formalities as a special case. IPPs claim that their legitimate verified claims have touched Rs 254 billion as on February 15, 2017.
When contacted, one of the representatives of IPPs said that the Ministry of Water and Power did not send any senior official to hear their arguments on issues which have already been submitted to the policy and decision makers. IPPs have also not indicated any intent to withdraw sovereign guarantee notice served to the GoP recently through the Ministry of Water and Power which forwarded those notices to the Ministry of Finance which, in turn, appears reluctant to pay the subsidy. "PPIB wasted an entire day on this issue but at the end of the meeting said that they will inform us after two days," said another source.
According to the Independent Power Producers (IPPs) Advisory Council, the total verified and audited amounts overdue to the power sector (excluding Wapda hydel) stood at Rs 414 billion. IPPAC maintains that the issue of a higher GST rate on fuels versus lower GST rate on electricity is not being addressed resulting in a rapid build-up of GST refunds which are not being paid by FBR. Implications of Sales Tax being applied to fixed charges by FBR which will eventually get passed on to end consumers, are not even being discussed, the IPPAC added.
The First In First Out (FIFO) method for payments, as specified in agreements, is being violated deliberately. Arbitrations under Dispute Resolution process in the agreements are being deliberately blocked. Other violations of agreed provisions in the contracts are being done regularly. Managing Director PPIB, Shah Jahan Mirza, who purportedly depends on the blessings of Water and Power could not be reached for comment, despite repeated attempts. However, PPIB spokesperson, Sami Rafi Siddiqui, who did not attend the meeting said "initial discussions took place today. Subsequent meetings will be held to resolve the matters".