Power Division (Ministry of Energy) is all set to sign a pact of 118.8 MW baggase-fired with M/s Fatima Energy Limited (FEL) on take-and-pay basis with the approval of Economic Co-ordination Committee (ECC) of the Cabinet as in an inquiry the PPIB and FEL have been exonerated from any wrongdoing, sources close to Secretary Power Division told Business Recorder.
The sources said, Additional Secretary Power Division, Dr Aamir conducted an inquiry against Private Power Infrastructure Board PPIB) for changing the status of 118MW Fatima Group's Captive Power Plant (CPP) to an Independent Power Producer (IPP).
According to sources, an inquiry had been initiated on the instructions of the then Prime Minister Nawaz Sharif who had directed the then Ministry of Water and Power (now Power Division) to initiate a probe and fix responsibility for changing the status of Fatima Energy Limited (FEL) from CPP to IPP.
FEL's 118.8 MW cogeneration power project was initially registered with the PPIB on August 23, 2010 under the National Policy for Co-Generation by Sugar Industry 2008 for setting up a 100MW Co-Generation power project. The project did not obtain tariff approval even after a lapse of three years and the registration was withdrawn on November 4, 2013 upon FEL's request.
FEL maintained that projects of 50MW are treated as CPPs whereas projects of 120MW are treated as IPPs. The company continued to develop the project independently without the umbrella of any GoP power policy and on September 11, 2015 informed the authorities that it had failed to secure bulk power purchasers of electricity. Further, FEL requested PPIB on September 11, 2015 to revert its 120MW cogeneration project (which at the time was expected to achieve Commercial Operation Date by June 2016) back to IPP mode under the Co-Generation Policy 2008. Subsequently, upon direction of the Ministry (based on the legal opinion of the Law Division), FEL once again registered with PPIB under the Co-Generation Policy on November 27, 2015.
The PPIB Board was apprised in February this year that earlier, on November 8, 2016, FEL communicated its acceptance of the Nepra-determined tariff to satisfy the requirement under the Co-Generation Policy 2008 to the fullest extent permitted against Nepra in the Islamabad High Court (IHC), seeking relief for compliance of GoP approved Co-Generation Policy.
PPIB deliberated the possible outcome of further processing the project during the pendency of a writ challenging the tariff, GoP entering into Implementation Agreement (IA) and/or Power Purchase Agreement (PPA) as per the terms and conditions of Nepra-determined tariff. Other complexities including fulfillment of prerequisites and latest project development stage of FEL (ready for despatch) were also discussed. Further, various issues related to the project such as bar on processing of projects based on imported fuels, modalities and construction completed project, difference in provisions of Letter of Support (LoS) and generation licencee and availability of security package were discussed in detail.
PPIB finalised the corresponding modalities to accommodate a construction completed project through slight modifications in the existing structure of project agreements. It was also discussed that allowing an under-construction/completed project may trigger similar requests in future from other investors/project companies. It was highlighted that the Board's earlier decisions for non-processing of private power projects based on imported fuel do not necessarily bar power projects under the Co-Generation Policy 2008, since these are different in nature and scope. The required amendments in relevant Security Document (IA/PPA) were also noted to cover and provide the necessary framework for the project.
The Board was briefed that upon receipt of requisite fee and Performance Guarantee (PG) as per Co-Generation Policy 2008, the LoS was issued to the company on December 21, 2016 subject to ratification of PPIB Board. As per the LoS, FEL was required to fulfill all the requirements of FC by June 21, 2017 deadline.
The sources said Power Division had submitted an inquiry report to the Cabinet Committee on Energy (CCI) headed by incumbent Prime Minister Shahid Khaqan Abbasi in its last meeting. The committee discussed the pros and cons of the inquiry report which remains "secret" and directed Power Division to submit a summary to the ECC seeking its approval to sign an agreement with FEL on take & pay basis.