ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has admitted a joint tariff reduction application under hybrid take-and-pay mechanism filed by seven Independent Power Producers (IPPs) established under Power Generation Policy 2002 and Central Power Purchasing Agency– Guaranteed (CPPA-G).
The IPPs which have jointly filed application for reduction in tariffs as per agreements with the Government’s Task Force are as follow;
(i) Nishat Chunian Power Limited;
(ii) Nishat Power Limited;
(iii) Narowal Energy Limited;
(iv) Liberty Power Tech Limited;
(v) Engro Powergen Qadirpur Limited;
(vi) Saphire Electric Power Limited; and
(vii) Saif Power Limited.
The task force headed by Minister for Power Sardar Awais Khan Leghari and comprising SAPM on Power Muhammad Ali, National Coordinator Lt General Muhammad Zafar Iqbal, Chairman Nepra, CEO CPPA-G, Managing Director PPIB and experts from Nepra, CPPA-G and SECP is engaged with the IPPs of 1994 and 2002.
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Some salient of terms and conditions are as follows:
(i) the Amendment Agreement shall be effective from November 01, 2024; Indexation mechanism of O&M has been changed;
(ii) tariff of cost of working capital and O&M has been rebased;
(iii) return on equity tariff component will be paid in a hybrid take and pay mode;
(iv) insurance premium tariff is capped at 0.9% of EPC cost;
(v) the Company will share profits till FY’23 and it will be adjusted, against receivables from CPPA;
(vi) GoP will unconditionally withdraw Arbitration under Arbitration Submission Agreements;
(vii) the undertaking provided to the Power Purchaser by the Company to retain its receivables till the conclusion of Arbitration under ASA shall be returned;
(viii) payment of outstanding receivables as on Oct 31, 2024 within in 90 days of approval of the Agreement by the Cabinet;
(ix) waiver of Delay Payments till Oct 31, 2024; and
(x) LCIA Arbitration clause in PPA will be substituted with Islamabad seated Arbitration under the local laws.
The government has claimed that it has saved Rs 1.4 trillion through Negotiated Agreements over the remaining life of these projects. Overall 16 IPPs of 2002 Power Generation Policy had signed revised contracts with the Government of Pakistan but one IPP; i.e., Halmore refused to sign the “forced” agreement and levelled serious accusations of mistreatment against the government.
Now the government has asked Nepra to conduct forensic audit of its power plant, which is owned by a British National. Nepra has sought comments from all stakeholders, interested parties/ affected persons and the general public. The Authority will also hold a public hearing in the matter on March 24, 2025.
Copyright Business Recorder, 2025
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