The Private Power Infrastructure Board (PPIB) has granted six month extension - up to December 7, 2017 - in the financial close date of two 660 MW each imported coal-fired power projects to be established by Hub Power Company (Hubco) at Hub (Balochistan), well-informed sources told Business Recorder. The Board, has also exempted the projects from doubling the amount of Performance Guarantee (PG) but after the required extension in its validity, subject to the condition that such extension in the FC date will not affect the synchronization date of the first unit (ie, December 31, 2018 and financial close date (ie, August 1, 2019) as per Power Purchase Agreement.
The sources said, the Board was briefed on the background and apprised that initially one project of 660 MW was included as actively promoted project of CPEC. However, later on the remaining project of 600 MW was included in the list of CPEC priority projects. Accordingly, financial close date was extended by five months till June 7, 2017.
It was revealed that the project company has already signed the Implementation Agreement (IA) with the GoP/PPIB on January 25, 2017. Further, the company conveyed few issues including pending jetty tariff with Nepra, delayed initialing of schedules of Power Purchase Agreement (PPA), non-finalisation of IA direct agreement, addressing the deficiencies highlighted by PPIB and has requested for another extension for a period of six months till December 7, 2017 in the financial close date on account of these issues.
The company has confirmed that the sponsors have undertaken many activities and also injected equity of $59,200,000 and sponsor loan amounting to $170,000,000 for the development of the project and that an extension in the financially close date shall not impact the synchronization date of the first unit ie December 31, 2018 and Commercial Operation Date of August 1, 2019 as agreed in PPA.
According to sources, pursuant to the MoU, the draft guidelines for coal/pet coke conversion of oil-fired IPPs were prepared in consultation with all the stakeholders and submitted for consideration of the ECC. However, the ECC advised Nepra to determine tariff for IPPs concerned in accordance with its prescribed procedure within a period of 45 days. Later on, all IPPs except Hubco submitted their tariff petitions to Nepra, while Hubco decided to suspend the coal conversion project and develop a new coal -based project. Prime Minister Nawaz Sharif had also directed the Ministry of Water and Power to hold an inquiry against Hubco for implementing the MoU signed with the GoP. However, the company took the stance that when it is establishing a new coal-fired power plant then there is no need to go for conversion of existing plant into coal-fired power plant. Water and Power Ministry initially was very active against M/s Hubco, however, later on, the Ministry also sided with the viewpoint of the company.