ISLAMABAD: The government is said to have stopped payments to 18 Independent Power Producers (IPPs) of 4,267-MW capacity, with whom negotiations will start for conversion of their pacts from take-or-pay to take-and-pay mode, well informed sources told Business Recorder.
These power projects were established under Power Generation Policies of 1994 and 2002, announced by the governments of that time, due to shortage of power in the country.
The sources said that conversion of Power Purchase Agreements (PPAs) of identified 18 IPPs from take-or-pay to take-and-pay mode would be for two years, when Competitive Trading Bilateral Contract Market (CTBCM) will be fully functional in the country.
Govt ends deals with five private IPPs
There was no apparent reason to stop payments to 18 IPPs suddenly, except to pay some dues of Chinese IPPs before the arrival of Chinese Prime Minister Li Qiang and clear the amounts agreed with the five IPPs against premature termination of their contracts at the time of signing the final settlement agreements, said one of the officials on condition of anonymity.
However, some insiders who are closely working with the government’s team on revision of PPAs, said that moratorium on payment to 18 IPPs is temporary, but did not specify the reasons behind this decision.
Power Division has already assured the International Monetary Fund (IMF) that following Nepra’s 2020 approval of CTBCM and the 2022 granting of market operator licences and approval of a market commercial code, they will finalise a policy framework by September 2024, (the deadline has already passed), to facilitate the transition toward a new wholesale market for electricity, which will improve distribution efficiency and incentivise improved Disco management. The transition will be carried out in a phased and responsible manner to minimise the impact on consumers and the budget.
The authorities further stated: “we will also strive to reduce capacity payments as we pay arrears, either by renegotiating PPAs with a new strategy, including by lengthening the duration of bank loans, depending on adequate budget space and CDMP implementation progress.”
According to PPIB’s website, the individual capacity of each IPP, with which negotiation are to start is as follows: Uch-I Power Limited of 586 MWs (COD, October 18, 2000) Pakgen Power Limited of 365 MWs (COD, February 1, 1998), Liberty Power Daharki Ltd 235 MWs (COD September 10, 2001), Kohinoor Energy 131 MWs (COD, June 20, 1997), Fauji Kabirwala Power Company Limited 157 MWs (COD October 21, 1999), Attock Gen Limited (165 MWs)(COD, March 17, 2009), Engro Power Gen QadirPur Limited 227 MWs (COD March 27, 2010), Foundation Power (Daharki) of 185 MWs(COD May 16, 2011), Halmore Power Generation Company 225 MWs (COD June 25, 2011), Liberty Power Tech Limited 200 MWs (COD, January 13, 2011, Hubco Narowal Energy Tech Limited 220 MWs (COD April 22, 2011), Nishat Chunian Power Limited 200 MWs (COD, July 21,2010, Nishat Power Limited 200 MWs (COD, June 9, 2010), Orient Power Company 229 MWs (COD May 24, 2010), Saif Power Limited 229 MWs (COD, April 27, 2010), Saphire Power Limited 225 MWs (COD October 5, 2010), the first hydropower project; i.e., New Bong Hydel IPP 84 MWs of Laraib Energy Limited, (COD, March 03, 2013 and Uch-II Power Project of 404 MWs (COD April 4, 2014).
The sources said that some of the IPPs have already given their consent for revision of their contracts mutually. “We cannot remain oblivious to the crisis in power sector and have agreed in the national interest to negotiate to arrive at mutually agreed agreement in a fair and transparent manner,” said one of the Chief Executives of identified 18 IPPs.
CEO, Liberty Daharki Power Company was one of those owners of power plants who held initial meeting with the powerful circles and announced its consent on revision of agreement at a press conference.
Copyright Business Recorder, 2024
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