PPIB decides to drop litigations against IPPs on reciprocal basis

ISLAMABAD: Private Power & Infrastructure Board (PPIB) has reportedly decided to withdraw all suits/ litigation against Independent Power Producers (IPPs) subject to reciprocal action by them, well informed sources told Business Recorder.

PPIB’s Projects’ Committee, sources said, has submitted its recommendations to the Board of PPIB headed by Secretary Power, for final approval.

Managing Director PPIB Shah Jahan Mirza apprised that in 2011 an issue arose between IPPs and NTDC on account of delay/ non-payment under PPAs.

The IPPs claimed that they were unable to meet the capacity obligations due to non-payment of invoices by NTDC, resulting in their inability to procure fuel. Therefore, IPPs were ‘deemed available’ under their respective PPAs and NTDC was not entitled to deduct capacity payments there-under. This triggered a series of litigation before various courts/ forums by IPPs and GOP’s agencies including PPIB, NTDC, CPPA-G, etc.

Later the Federal Cabinet constituted a committee to negotiate with IPPs and after successive rounds of discussions a MoU was signed with IPPs, whereby it was agreed that all pending legal claims will be withdrawn upon satisfaction of the settlement terms. In view of Settlement Agreement (SA), Supreme Court of Pakistan (SCP) disposed of a CPLA arising out of one of the orders of Lahore High Court and in light of SCP’s decision and terms of SA, all litigation for/ against GoP now needs to be withdrawn.

According to sources, representatives of GoKPK expressed concern regarding financial implication of withdrawal of litigation. DG Law PPIB explained that outstanding lawyers’ fees, if any, will be payable in case of withdrawal of litigation. CEO/ CFO CPPA-G explained that this cost will be negligible as compared to the quantum of award, which was in favour of IPPs and if executed would have been payable by CPPA-G.

Moreover, all litigation between IPPs and CPPA-G, quantum of which was in billions of rupees and was in favour of IPPs, had already been withdrawn; accordingly PPIB and IPPs must also withdraw any pending litigation. MD PPIB added that while negotiating SA, the maximum tariff indexation adjustment in US dollar was capped at Rs 168, which is very beneficial today as the US dollar is equivalent to around Rs281.

Representative of GoKPK inquired about the increased delayed payment ratio which today is KIBOR+2.0-2.5 5%, whereas in SAs, KIBOR+4.2% has been mentioned for delay beyond 60 days. DG Law PPIB explained that after negotiation the Settlement Agreement was approved by Federal Cabinet at that time, which cannot be renegotiated today. MD PPIB added that delayed payment rate in PPAs of these IPPs was KIBOR+4.5% and rate of KIBOR+2% for first 60 days which is actually a concessional rate in context of PPAs.

After detailed deliberations on pros and cons of the proposal, the Projects Committee unanimously agreed to proposed withdrawal of litigation.

The Committee has requested PPIB Board to consider and approve withdrawal of all suits, applications, petitions by GoP/ PPIB against the IPPs subject to simultaneous withdrawal of all proceedings, applications and writs filed by the IPPs against GoP/ PPIB in respect of disputes as fully enumerated whether through joint statement or otherwise as deemed appropriate.

Copyright Business Recorder, 2023