Forex reserve levels attract PM’s attention

ISLAMABAD: Prime Minister's Office (PMO) has reportedly sought a report from Finance Ministry on pending foreign exchange approvals from the State Bank of Pakistan (SBP), well informed sources told Business Recorder.

PMO has referred to letters written on October 3, 2022, October 10, 2022, November 8, 2022 and November 16, 2022, which were unanswered by the Finance Ministry.

Meanwhile, Private Power Infrastructure Board (PPIB) has written several letters to Executive Director, Exchange Policy Department, SBP for approvals of foreign exchange for the Independent Power Producers (IPPs) required for necessary maintenance.

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PPIB argued that the maintenance of the complex of Lalpir power project has been scheduled from February 1, 2023 and the matter of approval for opening of Letters of Credit (L/Cs) is still pending and many IPPs have not been facilitated on this matter till date.

According to Managing Director PPIB, Shah Jahan Mirza, pursuant to provisions of Implementation Agreements (IAs) executed between the IPPs and GoP, the GoP under section 10.4 of the IA, is contractually obligated to make necessary arrangements for availability of foreign exchange, in case it is not arranged through normal banking channels.

Further, pursuant to provisions of Power Purchase Agreements (PPAs), IPPs, under their contractual obligations are required to maintain their respective plants in full working condition to ensure smooth operations and reliable supply of electricity. Thus, failure to process payment for such imports would render IPPs unable to fulfil their obligations under their PPAs, which will have potential negative financial/legal implications for both the GoP and IPPs.

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He further contended that the IPPs are consistently agitating at this delay and have raised this matter at different high-level fora.

Considering the importance of the issue, the PPIB has once again requested the SBP to facilitate Lalpir Power Limited and other IPPs mentioned in PPIB’s earlier letters from them to carry-out timely periodic maintenance of generation plants and machinery to fulfil their contractual obligations and also avoid the risk of creating serious financial and legal implications for GoP and/ or its representative entities for potential breach of commitments and obligations made under the IAs/ PPAs.

Copyright Business Recorder, 2022