The International Financial Corporation (IFC), an arm of World Bank, has reportedly rejected proposed solar tripartite Energy Purchase Agreement (EPA), particularly the mark up rates; well informed sources told Business Recorder. As the largest global development institution focuses exclusively on the private sector in developing countries, the IFC has long been at the forefront of investing and mobilizing financing to support private sector participation in Pakistan's power sector. The IFC is acting as senior lenders and equity investors to multiple Independent Power Producers (IPPs) active in the energy sector of Pakistan.
According to the IFC, its investment in the renewable power sector alone in Pakistan exceeds $500 million. "We remain committed to supporting private investment in the key sector. To this end, we are very interested and have reviewed closely the draft of the proposed solar tripartite energy purchase agreement received from the Alternative Energy Development Board (AEDB). We understand the tripartite EPA will become the industry norm going forward and therefore, form a critical part of any decision by stakeholders looking to invest in the power sector," said, senior manager IFC Nadeem A Siddiqui in a letter to Secretary Power Division.
IFC has appreciated the Power Division for providing it the opportunity to work with the respective authorities to develop a bankable document which takes account of the changing nature of the sector and balances the interests of all participants.
"With this in mind, we have provided comments and our markup on the tripartite EPA along with proposed changes for consideration by the GoP, the Central Power Purchasing Agency Guaranteed Limited (CPPA-G) and National Transmission and Dispatch Company Limited (NTDCL)", he said, adding that by way of providing additional context to the proposed changes, IFC has sent a summary of key points and concerns to highlight for consideration of Secretary Power Division for redressel of issues related to markup.
"We fully appreciate that the proposed changes may require discussion and our team is ready to meet with the GoP, CPPA-G and NTDC in this regard," Siddiqui added. IFC claims that it leveraged its experience and track record to supporting private sector investments in the power market in Pakistan and elsewhere in the region by submitting the proposed changes.
"Our key objective in this exercise is to facilitate a bankable and commercial viable structure that appropriately addresses issues and concerns of project lenders providing long-term debt finance to an IPP project developed on a limited recourse basis," he continued. An official told this scribe that the proposed amendments sent by the IFC will be considered by the Power Division and other relevant organisations so that these could be made a part of public procurement rules. National Accountability Bureau (NAB) is already investigating solar projects.
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