Government asked to exempt IPPs from Rs 4 billion liabilities

The Ministry of Water and Power and the Planning Commission have recommended to the government to exempt the independent power producers (IPPs) from annual liabilities of Rs 4 billion, which these power producers have to pay under the Companies Profits (Workers' Participation) Act and Workers Welfare Fund Ordinance. The Planning Commission and the Ministry of Power have forwarded recommendations pertaining to these liabilities to the task force on 'Integrated Energy Security Action Plan'.
The task force was constituted by the government in December 2001, working under the chairmanship of Deputy Chairman Planning Commission while, secretaries of the Ministries of Industries and Production, Petroleum and Natural Resources, Ministry of Water and Power and Scientific and Technological Research Division are its members.
Sources told Business Recorder that the Ministry of Water and Power is of the view that IPPs should be given exemption in the matter otherwise the imposition of the obligation on IPPs estimated at Rs 4 billion per annum would result in substantial financial consequences in terms of increased tariff which would not be affordable to consumers, since any financial obligation is a pass-through items in the policy framework and carries the sovereign guarantee of the government of Pakistan.
Source said that the Planning Commission is of the view that for the facilitation of the IPPs, the government may make necessary amendments in the Worker's Profit Participation Fund Act, 1968 or pay the subsidies to the IPPs in this regard.
The Ministry of the Labour and Manpower was of the view that there was no provision of the relaxation in the laws and all structures of labour welfare would collapse if labour laws are changed.
The Planning and Development Division refereed the case to the Ministry of Law, Justice and Human rights which has opined that in view of the matter so far as the liability of the IPPs in relation of WPPF is concerned, the requisite contribution has to be made by the IPPs and the mere fact that Power Purchase agreement having provided this liability to be pas through Item payable by Wapda, the IPPs are not absolved from the liability.
It further said that to lessen the burden of the IPPs the government may make necessary amendments in the Worker's Profit Participation Fund Act, 1968.