ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved the principles for settlement of capacity deduction issues of imported coal-based projects and subsequent execution of side agreement with the Port Qasim Electric Power Company.

The meeting presided over by the caretaker Finance Minister Dr Shamshad Akhtar was submitted a summary of Power Division for approval of the principles for settlement of capacity deduction issues of imported coal-based projects and subsequent execution of side agreement with Port Qasim Electric Power Company was also discussed.

After a detailed discussion, the ECC approved settlement of the issue with PQEPCL as proposed by the Power Division.

Inching towards a coal crisis?

Sources said that Power Division stated that CPEC IPPs running on imported coal have been agitating issues of capacity deductions and imposition of liquidated damages, due to non-availability of power plants. These CPEC IPPs have claimed that non-availability of plants is attributable to failure on part of GOP to provide necessary foreign exchange cover for procurement of imported coal, which has caused fuel shortage.

Specifically, Port Qasim Electric Power Company (PQEPCL) suffered non-availability for 82 days. Resultantly, CPPA deducted an amount of Rs21.29 billion from the capacity payment of PQEPCL.

After protracted negotiation prolonged discussions, both parties agreed on broader principles, to find an amicable and mutually-acceptable solution, accordingly, a side agreement was also initialled between CPPA-G and the PQEPCL.

The ECC was requested to approve principles for settlement of capacity deduction due to fuel shortage and allow CPPA-G to negotiate with other CPEC power projects facing identical issues for a side agreement: These include; (i) in case of IPPs running on imported coal, if the foreign exchange is not available the power purchaser shall neither deduct the capacity purchase price nor impose the liquidating damages for the period during which the project remained unavailable due to fuel shortages.

(ii) for such period the IPP shall waive their right to claim the Return on equity (ROE) and cost of working capital (CWC) component of the capacity purchase price.

(iii) the IPP shall perform at the end of the PPA term for the same number of days equal to the number of days it remained non-available due to fuel shortage,

(iv) during these additional days the company shall be entitled for the capacity purchase price as indexed for the last quarter of the tern and energy purchase price as per terms of the PPA.

Pakistan Bureau of Statistics briefed the meeting on the inflation situation and the latest trends of prices of various essential commodities. The ECC directed National Price Monitoring Committee to continue regular coordination with the provincial governments for measures to ensure price stability and to check hoarding and profiteering.

The ECC also considered a summary of Ministry of Overseas Pakistanis and Human Resource Development for approval of Budget of Employee Old Age Institution (EOBI). The ECC was informed that EOBI’s contribution collection had remained stagnant during past years but had recently witnessed a substantial increase of around Rs100 billion. The ECC appreciated EOBI for its good performance and directed to strictly follow the budget calendar and prepare a long term plan to clear the Rs2 trillion liabilities of pension dues. The forum approved the proposed budget of the organisation.

The summary for approval of TAPI project as Qualified Investment Incentive Package under the Foreign Investment (Promotion and Protection) Act, 2022 (FIPPA) was discussed at length. The forum observed that it was a much-needed project and should be launched without delay.

The ECC also observed that the proposal for inclusion of the project under the FIPPA Act required further deliberations and examination of the legal aspects, incentives and concessions.

A meeting of Cabinet Committee on State Owned Enterprises (SOEs) was also held Thursday which gave the approval of publication of consolidated report of the State-Owned Enterprises for FY 2019-2020, 2020-2021, and 2021-2022.

Copyright Business Recorder, 2023