ISLAMABAD: Private Power and Infrastructure Board (PPIB) has reportedly given one month to Chinese Company M/s Azad Pattan Power (Pvt) Ltd -APPL to commence work on 700.7-MW hydropower project including approvals from M/s Sinosure or else PPIB will be compelled to explore other options, well informed sources told Business Recorder.
This message was conveyed to the company’s Chief Executive Officer (CEO) Wane Xiaoming and his team at a recent meeting of relevant stakeholders convened to review development progress of 700.7-MW Azad Pattan Hydropower Project.
The meeting was attended by representatives of CPPA-G, CPEC Secretariat, AJ&K Board of Revenue (Commissioner Poonch Division), Deputy Commissioner Sudhnoti, AJ&K Private Power Cell, Punjab Board of Revenue, Assistant Commissioner Gujjar Khan, Punjab Power Development Board, APPL and PPIB.
PPIB to review hydropower project progress tomorrow
Managing Director PPIB, Shah Jahan Mirza, while highlighting benefits of hydropower in terms of clean, affordable, indigenous source, stated that the purpose of the meeting is to review progress of the Project development activities/ milestones for achieving Financial Closing (FC) by December 31, 2024 as per the Letter of Support (LoS) and subsequent to Commercial Operation Date (COD) by September 2030 as envisaged in IGCEP 2022-31.
He added that power demand in the country has gone down and next iteration of IGCEP is under preparation therefore real-time status and way-forward with respect to Financial Closing timeline of Azad Pattan hydropower project is required so that power system requirement could be planned properly.
The CEO of the Company appreciated PPIB for arranging this meeting and while highlighting many factors including recent macroeconomic situation beyond its control, expressed commitment to develop Azad Pattan hydropower project with the support of the Government of Pakistan.
He also acknowledged facilitation of PPIB in development and construction of 884-MW Suki Kinari hydropower project being sponsored by M/s China Gezhouba Group Company (CGGC) under CPEC regime. Managing Director, PPIB appreciated the efforts and investments of CGGC in power sector of Pakistan.
On delay in achievement of Financial Closing, Managing Director PPIB stated that the project was issued LoS on June 30, 2016 and its progress during initial few years had been satisfactory; however, the progress of the Project is almost halted since past 2-3 years.
M/s APPL stated that after the execution of the Project Agreements, it approached China Export & Credit Insurance Corporation (Sinosure) for issuance of the LoI; however, in spite of all the efforts made by the M/s APPL and China Headquarters, Sinosure has not issued the LoI which is a requirement for arranging around $ 1.4 billion financing for the Project. Payments problem of CPEC commissioned IPPs and recent adverse macroeconomic situation are resulting in lack of interest by Sinosure in issuance of clearance for upcoming projects.
Managing Director PPIB highlighted that the Project has been included in “committed” category and continuously holding space in IGCEP without meaningful development progress. He showed concern over the fact that neither the Project is moving ahead nor it is leaving space in IGCEP to allow other pipeline projects to be included whose sponsors are very much anxious to invest in hydropower sector of Pakistan.
“The delay in development of this large-scale project is creating imbalance in the power generation planning as well,” he said, suggesting that the Sponsors of Azad Pattan should start development activities now, or alternatively, PPIB may discuss mutually some alternate mechanism for amicable exclusion of the Project from IGCEP creating space for other pipeline hydropower projects and upon issuance of Sinosure clearance, the project can be included as per the new optimized timelines in IGECP.
Representative of APPL stated that confidence level of China side is improving. The CGGC Headquarters are making efforts for issuance of LoI from Sinosure and requested PPIB to continue support so that the core issue of Sinosure clearance is resolved at the earliest.
On delay in acquisition of land (AJK part), APPL apprised that on AJK side total required land is 8,155.8 Kanal. Rs 2.214 billion were paid for 3,186.35 Kanal private lands. Awards of private lard located in Tehsils Mong, Thorar and Dhirkot were issued by GoAJ&K in early 2021. Land lease agreements were approved by GoAJ&K in August 2021.
APPL added that four petitions filed by ex-land owners are also in process in civil courts. M/s APPL sought due facilitation and support of AJK entities for completion of the land acquisition process and conclusion of court cases.
AJK BOR (Commissioner Poonch Division) responded that AJK side intends to settle the affectees in the shape of residential colonies and require additional funds from APPL for development of requisite infrastructure.
APPL replied that they have paid all the legal costs of lands, structures, trees etc. as were determined by AJK side and in case of Jabrana, APPL instead of 15%, paid 25% to ease the administration and affected people. Therefore, no further legal payment is due on part of APPL under the Land Acquisition Act, 1894 and no formal request was received from AJK side for additional funds.
The CSR fund may be utilized by AJK side but availability of this fund will start after commissioning/ revenue generation by the project.
Managing Director PPIB emphasised that every amount must have legal basis for NEPRA to consider such cost, therefore if under the legal regime, some amount is still pending on part of the Company, AJ&K authorities should ask through official communication in writing. Commissioner Poonch Division agreed to comply with the law in letter and spirit.
With regards to ongoing court cases, it was agreed that AJK BOR and AJK PPC/ PDO will extend due facilitation for early conclusion of such cases.
On delay in land acquisition (Punjab Side) APPL apprised that on Punjab side total required land is 4,446 Kanal.
Till now, Rs 285.7 million have been paid. Awards of private lands located in Gujjar Khan, Kotli Sattian and Murree were issued in February-March 2022. However, following are yet to be accomplished by concerned entities of Punjab government since long: (ii) deeds of conveyance for private lands in Kotli Sattian and Murree; (ii) mutation of CSA for government land in Murree ;(iii) physical possession of alternate forest land in Gujjar Khan; and (iv) de-notification of reserved forest land by Punjab Forest Department is dependent on possession of Alternate land for forest.
With regards to deeds of conveyance, representative of Secretary BoR noted that opinion of Punjab Law Department is being sought on the word “absolute”.
MD PPIB advised to follow the precedent of Karot HPP’s deeds of conveyance because Chinese lenders may not accept such changes. DG (Hydropower) PPIB added that project will be transferred to government after completion of 30 years term therefore words “absolute ownership” in the deeds of conveyance should not be of much concern.
With regards to pending mutation of CSA, the representative of BoR said that instruction will be issued to Assistant Commissioner Murree to do the needful without any further delay.
With regards to acquisition process of alternate land for forest, Assistant Commissioner Gujjar Khan updated that 43% amount has been disbursed to ex- owners.
He also highlighted the case under trial at Lahore High Court (Rawalpindi Bench) and sought support of entities to vacate the stay order which was agreed in the last meeting.
APPL highlighted its obligation was to the extent of payment for alternate forest land and ongoing process towards granting possession of the land is between revenue and forest departments, however, forest department has linked de-notification of reserved forest land with the physical possession of alternate land due to which land acquisition activity is on critical path. Further, APPL highlighted that this compulsory acquisition under Land Acquisition Act, 1894 and the court case can only be considered for compensation purpose.
Managing Director PPIB advised AC Gujjar Khan to fast-track the ongoing process of land acquisition and requested APPL for close coordination in the court case.
Further, Revenue Department should approach Advocate General Office for seeking support in vacation of stay order/ conclusion of the said case. Punjab Power Development Board (PPDB) was also requested to provide facilitation and follow up at Punjab AG Office.
During discussion on conditional approval of Tripartite Power Purchase Agreement (TPPA), APPL apprised that TPPA was signed after approval of the ECC. Subsequently, CPPA-G sought Nepra’s approval to the TPPA. NEPRA approved the TPPA with the condition that the Article VI (interconnection facilities) is not part of the tariff determination and hence be not reflected in TPPA, pass-through items in the TPPA shall be claimed subject to approval of Authority, Liquidated Damages (LDs) if enforced by either party and shall have no adverse bearing on consumers. In the event of any conflict or inconsistency between provisions of TPPA and the tariff determination, the tariff determination shall prevail, etc.
On query from PPIB about approaching Nepra Appellate Tribunal, APPL responded at that time Tribunal was not available. MD PPIB advised APPL may approach Nepra Appellate Tribunal to which APPL agreed.
On the withholding tax issue in AJ&K, APPL apprised that WHT (Rs 19.94 million) on payments to Lenders Advisors levied by GoAJ&K is in contradiction to Double Taxation Treaty (Article 13) between China and Pakistan. After departmental exercise and in the absence (non-functional) of Appellate Tribunal) Inland Revenue, APPL approached AJK High Court for stay order which was granted on January 30, 2024.
The Appellate Tribunal Inland Revenue also became functional in September 2023. Two hearings were done in October 2023 and decision is awaited.
Managing Director PPIB advised AJK PPC/ PDO to liaise with AJK Finance Department and extend facilitation for resolution of this issue.
After threadbare discussion the meeting took following decisions: (i) APPL will decide, within one month, about restarting the development progress of the project and provide realistic timeline for achievement of FC and COD of Azad Pattan HPP; (ii) AJ&K BOR through Divisional/ District/ Tehsil administrations will expedite and complete remaining acquisition process of private land within three months; (iii) for land acquisition on Punjab side, accomplishment of deeds of conveyance and mutation of Conditional Sale Agreement (CSA) will be achieved within one month; (iv) completion of payments to ex-owners in Gujjar Khan Tehsil for alternate land will be further expedited for getting land possession on priority. Facilitation on account of court case will be sought from Punjab AG Office as well as the Company will keep close coordination with the relevant government entities; (v) APPL in coordination with CPPAG will approach Appellate Tribunal (Nepra) regarding its grievances (if any) against Nepra’s decisions ;(vi) AJK PPC/PDO will facilitate the Company in resolving withholding issues amicably in AJ&K; and (vii) PPIB will continue to support APPL in highlighting its case before Sinosure and financial intuitions for their early clearance of Project financing.
Copyright Business Recorder, 2024
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