Payments to IPPs: PD may submit report in upcoming meeting of CCoE

ISLAMABAD: The Power Division is likely to submit the report of the implementation committee headed by Minister for Finance on Independent Power Producers (IPPs) established under Power Generation Policy 2002 in the forthcoming meeting of the Cabinet Committee on Energy (CCoE).

Well-informed sources told Business Recorder that Ministry of Law and Justice has responded to questions framed by the Power Division.

Meanwhile, the National Accountability Bureau (NAB) has also conveyed to the Ministry of Law and Justice, in a one liner that the anti-graft organization’s case is against Nishat Chunian.

According to sources, the implementation committee has decided that whatever decision is announced by the arbitrator in the Rs 8.36-billion case against Nishat Chunian it will be acceptable to all the parties.

The matter of the alleged saving in the tariff component of 12 IPPs of 2002 Policy is under investigation by the NAB. The Power Division wants validation of the process of negotiations and signing of agreements including Arbitration Submission Agreement.

The NAB, sources said, has now conveyed that it has no objection to making payment to the IPPs of 2002 Policy except Nishat Chunian. However, Power Division is still not ready to take lead role in payment due to fear of NAB and wants the Implementation Committee to come forward and endorse the proposal for submission to the CCoE, Economic Coordination Committee (ECC) of the Cabinet and Federal Cabinet.

A couple of months ago the Power Division backed out from Implementation Agreements with the IPPs establishes under Power Policy 2002, and proposed negotiation of Master Agreements in the light of NAB’s third letter.

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The Power Division’s stance is entirely contrary to the viewpoint of Finance Minister Shaukat Tarin, who on June 22, 2021, while replying to an enquiry with regard to stalemate in payments to IPPs and Roosevelt Hotel assured the Cabinet of resolution of the issue through discussions with the NAB soon.

The sources said, CCoE and ECC had approved the payment mechanism and agreements with IPPs in meetings held on February 8, 2021 which was ratified by the Cabinet on February 9, 2021. On a summary submitted by Power Division on May 5, 2021, ECC decided and Federal Cabinet ratified the following decisions of the ECC on May 18, 2021: (i) payments to all IPPs (under Pre-1994, 1994 and 2006 Power Policy) may be processed accordingly to the signed agreements except the IPPs under Power Policy 2002 till the conclusion of the NAB investigation.

In view of the previous decisions by the ECC and Federal Cabinet and response from NAB, the Power Division submitted a summary for the consideration of ECC with proposal that the payments to IPPs (under Power Policy 2002) may continue to be withheld, and the process of signing Arbitration Submission Agreement with these IPPs and notification of the revised tariffs as determined by Nepra may remain suspended till NAB investigation is concluded.

The government had paid Rs 90 billion as 40 percent of agreed amount to some IPPs in June this year and remaining 60 percent is expected to be paid in December next. However, payment to IPPs established under 2002 policy is linked to a nod from the Cabinet.

Copyright Business Recorder, 2021