IPPs: processing fee raised manifold

The Private Power & Infrastructure Board (PPIB) has increased Independent Power Projects (IPPs) processing fee manifold under the guise of financial autonomy, well-informed sources told Business Recorder . Managing Director PPIB, Shah Jahan Mirza recently presented an overview of the income and expenditure position along with depleting trends of the organization''s resources.
It was highlighted that the role and the responsibilities of the PPIB have been recognized and strengthened by making it a statutory body through an Act of Parliament which received the assent of the President on the 2nd March, 2012. According to insiders, several senior officials of the PPIB are running their own businesses including coffee houses, private schools and IT. The PPIB officials are also "facilitating" project deals for specific investors.
It was revealed that PPIB does not receive any regular funding from federal budget/GoP. In order to make PPIB financially autonomous, initially the GoP and World Bank agreed to allocate a share of 25 basis points, from the spread on sub-loans given to private power projects by NDFC (now defunct) under Private Sector Energy Development Fund (PSEDF). However, NDFC did not pay PPIB''s share on the plea that it was incurring losses in the administration of PSEDF. Starting from 1995 up to March 2002, PPIB received a total amount of only Rs 26,574,666/- under this head. The issue was taken up at various forums/levels but no further amount was paid to PPIB.
In view of the depleting resources and increasing expenses due to enhanced role of the organization, PPIB Board in its 105th meeting held 3rd May 2016 directed to explore and present proposals for a regular source of income to meet its ongoing operating expenses. PPIB Act-2012 envisages that PPIB Board may prescribe and receive fees and charges for processing applications and deposit and disburse or utilize the same if required. In this regard options for generating regular source of income for PPIB were presented for consideration of the Board.
The proposal included (a) revised rates for processing fee; (b) (i) fixed annual fee of $ 500/MW after achievement of CoD from under-process and future IPPs under Power Policies 2002, 2015 or alternatively (ii) fee on unit generated basis to be charged to all IPPs and (c) fee upon change in shareholder structure, etc. MD was of the view that since PPIB does not receive any regular income from federal government increase in existing rates and introduction of new fee structure would be required to generate sustainable means of income for PPIB''s smooth functioning.
The Board discussed the matter and agreed upon (a) revised processing fee on various project milestones (b) annual fee on MW basis (c) fee upon change in shareholders and (d) design change fee etc. as follows - Registration - existing fees $ 200 and approved fees $ 300 ;(ii) unsolicited proposals: Issuance of pre-qualification documents, - existing fees $ 1500 and approved fees $ 300, solicited proposals- issuance of Request for Proposals (RfP) documents- existing fees $ 2500 and approved fees $ 500;(iii) bid Processing fee for ICB projects from each bidder - existing fees $ 20,000 and approved fees $ 500/MW, Min $ 10,000, max $ 50,000;(iv) proposal processing fee for solicited (non ICB) projects - existing fees none and approved fees $ 300/MW, Min $ 7,000, max $ 50,000;(v) issuance of LoI - existing fees none and approved fees $ 500/MW, min $ 10,000, max $ 300,000;(v) extension in LoI (each for extension) - existing fees none and approved fees $ 250/MW, min $ 5,000, max $ 150,000;(vi)
issuance of LoS - existing fees $ 100,000, $ 80,000 and approved fees $ 800/MW, min $ 20,000, max $ 400,000;( vii) extension in LoS (for each extension) - existing fees none and approved fees $ 500/MW, min $ 10,000, max US$ 300,000;(viii) upon achievement of financial close - existing fees none and approved fees $ 1,000/MW, min US$ 20,000, max $ 500,000;(ix) upon achievement of Commercial Operation Date (COD) and payable on each anniversary of COD starting from past anniversary (a) -existing fees None and approved fees $ 300/MW and ;(x) design change fee per MW - existing fees none and approved fees $ 250/MW, max $ 150,000 .
The fee upon change in indirect or beneficial shareholding, where GoP/PPIB approval is required - existing fees none and approved (i) up to 25MW, 300 rate per % change - $ 20,000 max cap; (ii) up to 26-50MW, 400 rate per % change - $ 25,000 max cap; (iii) up to 51-100MW, 500 rate per % change - US$ 32,000 max cap; (iv) up to 101-200MW, 750 rate per % change - $ 50,000 max cap; (v) up to 201-300MW, 1500 rate per % change - $ 100,000 max cap; (vi) up to 301-400MW, 1800 rate per % change - $ 120,000 max cap; (vii) up to 401-500MW, 4500 rate per % change - $ 300,000 max cap and ; (viii) above 500MW, 6000 rate per % change - $ 400,000 max cap. After detailed discussion, the Board approved the processing fee at various stages, annual fee on MW basis, design change fee, fee upon change in shareholders, etc. as noted above to generate a regular sustainable source of income for the PPIB.