M/s Fatima Energy Limited (FEL) which established a 120 MW bagasse/ coal-fired power plant in Muzaffargarh with an investment of Rs 32 billion is reportedly not being provided level playing field due to "unseen" hurdles in concerned ministries, well informed sources told Business Recorder.
In a letter to Secretary Power Division, Rizwan Memon, the company argued that the project is able to supply low cost critically required power immediately to the people of Pakistan, but unfortunately it has been idle since last 21 months.
According to the CEO FEL, the company has complied with all procedural and regulatory requirements by submitting mutually acceptable draft Interim Agreement to CPPA (G)/Ministry of Energy (Power Division) to be followed by complete power purchase agreement (PPA) as per Take and Pay Nepra determined Tariff of January 18, 2018. FEL being low cost and reliable energy producer with levelized Nepra determined tariff of cents 7.72, would save Government of Pakistan / consumers about Rs 2 billion per annum if compared with similar bagasse only producers of power or other high cost power producers.
The company has furthermore claimed that Cabinet Division has concluded inquiry report upon instructions of CCoE, which has declared no wrong doing by anyone, and exonerated FEL& MoE. In addition, the Ministry of Law has clarified that since there is no restraining order by Honourable High Court on new tariff issued by Nepra on January 18, 2018 pursuant to IHC orders it can be notified by MoE and PPA signed by CPPA.
Secretary Power has been requested to implement the decision of CCoE of September 6, 2017 approving signing of agreements with FEL, comply and implement findings of Cabinet Division inquiry report as well as guidelines/ clarifications by Ministry of Law.
CEO of the company Fazal Ahmed Sheikh who is expected to meet caretaker Minister for Energy, Barrister Ali Zafar this week, argued that it would enable savings of over Rs 2 billion per annum to Consumers/National Exchequer from ready-to-dispatch low cost power plant and assist in reduction of shortages/loadshedding of electricity in the national grid. The delay in implementation of decisions has already caused huge financial loss of Rs 4.4 billion to the consumers/national exchequer as well as loss of foreign exchange.
The sources said, Nepra decided tariff of FEI in Jun/ Oct 2016 against the National Policy for Power Cogeneration by Sugar Industry 2008. Subsequent to the issuance of the generation licence and the tariff determination by Nepra, the company was issued a Letter of Support (LoS) on December 21, 2016 which required the company to execute the Power Purchase Agreement (PPA) with the power purchaser and the Implementation Agreement (IA) with the Government of Pakistan.
The company, CPPA and PPIB negotiated and finalized draft project agreements. CCoE issued approval of the project on September 6, 2017 and negotiated and agreed draft project agreements were under process for approval of the ECC.
The company had filed writ petition against Nepra in Islamabad High Court and the decision was announced on Sep 6, 2017 in favour of the company, setting aside Nepra tariff determination. The court ordered tariff petition filed by the petitioner was deemed to be pending before Nerpa and determined as per Policy and observations of the IHC.
However, on the pretext of the court order, PPIB unilaterally cancelled LoS on January 12, 2018 despite the fact that Ministry of Law on December 28, 2017 clarified that tariff has been set aside by IHC order and there is no breach on part of FEL. Further the setting aside of tariff determination does not affect the legal relationship between FEL and PPIB. While responding to Ministry of Energy on May 23, 2018 Ministry of law has confirmed that PPA can be executed with FEL enabling supply of power.
Nepra issued new tariff on January 18, 2018 again on take and pay basis in violation of IHC judgment. FEL filed contempt application against Nepra in January 2018 and in continuation an enforcement of court order application in April 2018 requesting the IHC for implementation of court order of September 6, 2017.
In January 2018, another inquiry was initiated by CCoE to investigate inter-changeability of FEL from captive to an IPP for reasons unknown whereas FEL was unequivocally exonerated in the inquiry held in 2017 on same matter. FEL presented all facts of the project to the committee along with documentary evidence. The inquiry committee had issued its report in May/June 2018 and exonerated FEL and all the government institutions for any wrongdoing or malpractice as FEL was never a captive power plant and was always registered as IPP under one power policy being Cogeneration Power Policy 2008.