11 IPPs may get Rs131bn as first instalment
11 IPPs may get Rs131bn as first instalment

ISLAMABAD: Power Division is all set to send a summary to the Economic Coordination Committee (ECC) of the Cabinet in its forthcoming meeting for payment of Rs131 billion, first instalment of 40 per cent of agreed amount to 11 Independent Power Producers (IPPs) of Power Generation Policy 2002.

On September 13, 2021, Power Division submitted a report of the Implementation Committee (IA) headed by Minister for Finance Shaukat Tarin to the Cabinet Committee on Energy (CCoE) headed by Minister for Planning, Development and Special Initiatives, Asad Umar on the ratification of the IPPs agreement, under the Power Generation Policy 2002.

After detailed discussion, the CCoE approved the final report of the IA and directed Power Division to proceed with the payment of all 11 IPPs as per the signed agreements except Rs8.6 billion of Nushat Chunian Power Limited of Mian Mansha, which is under investigation by the National Accountability Bureau (NAB). The decision of Arbitrator will be final in the case of M/s Nishat Chunian.

The following IPPs will get payment 40 per cent of the agreed amount: (i) Atlas Power- RFO ;(ii) Attock Gen- RFO;(iii) Engro Energy-gas ;(iv) Saif Power- RLNG ;(v) Halmore Power- RLNG;(vi) Hub Power(Narowal) – RFO ;(vii) Liberty Power- RFO ;(viii) Nishat Power- RFO;(ix) Orient Power- RLNG ;(x) Foundation Power (Dharaki)- gas ; and (xi) Saphire Electric –RLNG.

The issue of excess profitability of the 2002 Power Policy IPPs has been highlighted through the report of the committee of power sector audit, circular debt resolution and future roadmap. Subsequently, the Committee for negotiations with the IPPs notified on June 3, 2020, signed MoUs with the IPPs containing the following clause: “In order to assess if IPPs have made any excess profits, the reconciled numbers between the Committee and the IPPs shall be submitted to Nepra.”

However, Nepra argues hat it is premature to assume that IPPs under Power Generation Policy 2002 secured illegal gains as it is yet to be determined by the regulator.

The government has already paid Rs 90 billion to the IPPs established under pre-1994 and 1994 policy as 40 per cent of first instalment of total agreed amount in June this year. However, payment to IPPs of 2002 policy was withheld due to the ongoing investigation against M/s Nishat Chunian Power Limited subsequent to NAB’s letters to the Power Division which brought put pressure on the authorities at the Power Division.

The officials of Power Division categorically stated that they will not proceed further until a clear chit is received from NAB and they are not ready to appear before the anti-corruption watchdog by taking any decision on their own.

Power Division authorities repeatedly stated that the ECC or Cabinet has to take responsibility for payment to the IPPs.

Finance Minister Shaukat Tarin also has observed that the letter from NAB on the issue was clear. Therefore, further action should be taken accordingly. He suggested that various options could be considered for payment to IPPs after deducting the disputed amounts as may be determined.

The sources said in the light of NAB’s third letter Power Division sent questions to the Ministry of Law and Justice, seeking legal opinion on the wording of the letter. The Ministry of Law opined that Power Division can pay the agreed amount to the IPPs of 2002 except Nishat Chunian Power Limited.

Finally, Power Division placed the matter with the Implementation Committee, which agreed on payment of 40 per cent as first instalment of total agreed amount to the IPPs of 2002.

On September 13, 2021, CCoE also allowed Power Division to pay the amount of IPPs of 2002, except a company whose case are under investigation at the NAB.

The sources sai, payment to the IPPs of 2002 will be made after ratification of decisions of ECC and CCoE.

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