ISLAMABAD: Independent Power Producers (IPPs) of 2002 have appointed former Justice Khalil-ur-Rehman Ramday as arbitrator in the light of Arbitration Submission Agreement (ASA) entered by the President of Pakistan and Power companies.
According to the agreements signed between the IPPs of 2002 and GoP, for resolution of Rs 56 billion, allegedly for excess payments made in the past against 2002 Power Policy IPPs, will be achieved through Arbitration Panel of ex-judges of the Supreme Court, whose decision will be binding for both the parties without going further into appeals in foreign/local courts.
The IPPs of 2002 policy, in letters to Secretary Power Division noted that pursuant to Clause 1 Arbitrators/Tribunal of the ASA, each party is to appoint an arbitrator on the 3- Member Tribunal to be constituted there under. In this regard, in keeping with the requirements of Clause 1 of the ASA, the IPPs notified Secretary Power of the appointment of Justice Khalil-ur–Rehman Ramday (retired) as the companies appointed Arbitrator.
On June 22, 2022, the Economic Coordination Committee (ECC) of the Cabinet approved payment of Rs 87.421 billion to the IPPs of 2002 as second installment of agreement.
Power Division, in its summary to the ECC noted that in light of CCoE decision of September 13, 2021 and-December 2, 2021, it had signed ASA with 11 IPPs.
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Foundation Power Company Limited, an IPP under 2002 policy had not signed the ASA. With regards to Nishat Chunian Power Limited (NCPL), CCoE authorized Power Division to secure the alleged excess profits of Rs. 8.36 billion by way of undertaking from NCPL as amended by Law & Justice Division. In this regard, CPPA-G, in its letter of June 15, 2022 conveyed that after preserving/withholding the secured amount of Rs. 8.36 billion, remaining amount out of the payables to NCPL on the payment etc., be paid to NCPL, up to a maximum of Rs.8.77 billion.
Accordingly, payment to NCPL would be actualized on the date of payment subject to retention of Rs.8.36 billion pursuant to undertaking. The amount payable to IPPs under 2002 Power Policy as second installment was Rs.87.421billion and Rs.8.712 billion (as second installment) for TNB Liberty. Since the matter was exigent in nature and as per agreement first installment (40%) to the IPPs had already been made on January 6, 2022 and the second installment was to be paid within a period of six months from the date of release of first installment under approved payment mechanism. Further, the ECC had earlier also approved Rs.100 million for arbitrational expenses during CFY 2021-22.
The ECC was informed that consultations were carried out with key stakeholders including the Law and Justice Division, Finance Division and CPPA-G, Power Division and the following proposals for consideration and approval of the ECC were submitted: (i) Supplementary Grant of Rs.96.133 billion; (ii) payment of Rs.78.65 billion as second installment (60% payment) under payment mechanism as approved by the ECC on February 8, 2021 to Nishat Chunian Power Limited, an IPP under 2002 Power Policy.
In case of payables of NCPL by CPPA-G are less than Rs 8.771 billion after securing Rs 8.36 billion, pursuant to undertaking on the day of payment, then payment of second installment shall be adjusted downwards accordingly; (iii) payment of Rs.8.712 billion as second installment (60% payment) under payment mechanism as approved by ECC on February 8, 2021 to TNB Liberty Power, an IPP under 1994 Policy; (iv) approval to transfer the amount of 96.133 billion so approved a supplementary grant for payment to IPPs; and (v) approval to release Rs.100 million as advance to CPPA-G for payment to arbitrator and the law firm nominated by the Law & Justice Division. The ECC of the Cabinet had already approved Rs.100 million as arbitrational expenses for the proceedings in CFY and the budget and the same was available under the Power Division.
Copyright Business Recorder, 2022