The government has decided to establish Central Power Procurement Authority (CPPA) to deal with the matters pertaining to power purchase and financial issues of generation companies (GENCOS) and distribution companies (DISCOS), official sources told Business Recorder.
"CPPA will be made a part of WPPO as an interim arrangement for three-year and as soon as the corporatisation process is completed all functions will be automatically shifted to the new entity," the sources added.
Once the entities were responsible for their own financial flows and tariff determinations were notified, the role of CPPA would become pivotal, the sources said, adding that the body would channel the funds to the generators, including independent power producers (IPPs) as well as playing a key role in soliciting new generation.
The sources said all the recovery of DISCOS would go to the central pole and the CPPA would distribute the amount among the companies as per their share.
They also said those DISCOS, which would not be able to pay all their dues could get funds from the government to bridge their losses.
The sources said the government would ensure that the transition to the new entities and full financial independence does not breaks down the 100 percent payment record of the sector of IPPs, which is crucial. However, the World Bank has suggested that sufficient monitoring system is needed to put in place and possibly interim cash flow measures such as escrow accounts at commercial banks, may also need to be considered.
The sources added that the Water and Power Ministry as representative of the shareholder should also ensure that all entities realise the importance attached to ensuring cash flow to the IPPs and consequent implications for the management.
They said the National Electric Power Regulatory Authority (Nepra) was in the process of finalising revised distribution entity tariff determinations following the review motions that each of the eight companies lodged. While process has been time consuming so it was important for the legitimacy of the regime and the external perception of the way in which regulation operates in Pakistan.
Once these determinations are completed by end-October it would be equally important for the Government of Pakistan to notify them as quickly as possible and no later than mid-November.
The sources said a high-level meeting is expected to be held in Wapda House Lahore in a day or two to finalise the CPPA and other measures regarding corporatisation of Wapda's power sector, which has not shown any remarkable progress on the issue.
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