ISLAMABAD: The Private Power and Infrastructure Board (PPIB) has constituted a seven-member special technical committee to take a global view to ascertain whether the government of Pakistan (GoP), as shareholder of its entities, will be better off in financial terms, if power purchaser of 300-MW coal project of M/s Siddiqsons Energy Limited (SEL) is changed from CPPA-G to KE, sources close to Managing Director PPIB told Business Recorder.
The decision has been taken by the PPIB Board headed by Secretary Power Division Rashid Mahmood Langrial.
The Board has also forgiven and restored bonus of those officials of legal section of PPIB who allegedly had connived with ‘anti-PPIB elements’ during court proceedings.
SC moved against PPIB (amendment) Act
MD PPIB Shah Jahan Mirza explained that for issuance of the 8th extension in Financial Close (FC), SEL was repeatedly requested to quadruple its PG and deposit extension fee. However, it failed to fulfil these requirements and consequently, due to default in achieving FC, PPIB proceeded to en-cash its PG.
SEL immediately obtained stay order which, later on, was vacated and PG was en-cashed. Thereafter, SEL approached Islamabad High Court (IHC), which reserved its judgment and gave directions to freeze the proceeds in an interest-bearing account until a decision.
Meanwhile, SEL proposed a draft Settlement Agreement to PPIB, whereby IA, PPA and LoS with the GoP will be terminated and encashment of its PG in full by the GoP.
The Parties shall immediately withdraw any lawsuits and the GoP shall provide support to SEL for (a) continued development of the project with K-Electric as the new power purchaser and (b) procurement of all consents required for the project from the public sector entities including provision of interconnection and transmission facilities by NTDC.
MD PPIB further apprised that as a standard practice, after PG encashment, LoS should have been terminated, but NTDC requested PPIB for recovery of amount equivalent to TSC for capacity payments to PMLTC.
When matter of recovery of LDs was referred to CPPA-G, they clearly stated that since PPA was not effective in its entirety, there are no legal grounds to recover HVDC LDs. In view of DG (Law) PPIB, SEL may be asked to pay a certain portion of LDs and in return PPIB may facilitate SEL’s proposed settlement agreement.
MD PPIB argued that partly recovering LDs, would be tantamount to waiver of un-recovered portion which itself will become a difficult point to justify as to why full amount of LDs was not recovered from SEL. Further SEL will not agree to such a proposal where it will be required to pay what is not due, given the fact that the project will not remain viable as the tariff is 1 cent lower than other Thar-coal-based projects. Recommendations of Projects’ Committee were also presented to the Board.
Representative of the government of Sindh opined that PMLTC was designed to evacuate power from SEL and in absence of this project the cost of LDs is born by the GoP. Therefore, LOS should be terminated forthwith as per policy and some other investor may be given a chance.
The Chair and MD PPIB maintained that SEL has already faced maximum possible consequence of its default through encashment of PG, and in absence of any other investor, the Board is trying to find out maximum benefit, which can be brought to the GoP.
The Chair opined that a proposal may be considered if SEL is willing to invest in project out of its equity. On a question by the Chair regarding consequent reduction in “Tariff Differential Subsidy” on transferring project to KE vis-à-vis cost of waivers to SEL, MD PPIB submitted that this impact has to be calculated in consultation with CPPA-G.
The Board desired that a “Technical Committee” be constituted, headed by MD PPIB and comprising of senior level representation from Finance Division, Planning Division, CPPAG, NTDC and government of Sindh. The committee will take a global view to ascertain whether the GoP, as shareholder of its entities, will be better-off or not, if SEL is handed over to KE.
The committee shall consider any/ all factors for its evaluation of proposal. The committee will first devise a methodology for evaluation. After finalization of proposal and approval by the Board, it will be placed before SEL for negotiation and implementation. Mandate of Committee was discussed again in the Agenda of this meeting, wherein it was desired by the Board to devise a single solution for adding power generation to KE, whether hydel, coal or renewable, with an objective to reduce generation cost of KE.
MD PPIB also brought attention of the Board towards Agenda 3 (c) of its 135th meeting dated 21st June 2022, wherein the Board decided to stop payment of Bonus to Law section of PPIB. MD PPIB submitted that with vigorous pursuit of litigations by officials now PG of SEL has been en-cashed, the Board was requested to allow payment of bonus to Law Section of PPIB. The Board granted permission to pay withheld bonus.
The Board a Special seven Members Technical Committee headed by Managing Director PPIB with the following terms: (i) The Committee will take a global view to ascertain that whether the GoP, as shareholder of its entities, will be better off in financial terms, if power purchaser of SEL is changed from CPPA to KE;(ii) The Committee will also evaluate whether any other power plant could be allocated to KE as power purchaser in order to reduce generation cost of KE and; (iii) The Committee will first devise a methodology/ parameter for such evaluation. The Committee shall consider any/ all factors, which it may deem necessary, for its evaluation. After evaluation, a proposal will be placed before the Board for consideration.
Copyright Business Recorder, 2023