ISLAMABAD: In a blow to the efforts of the PTI government to slice down the tariffs of 47 IPPs, as many as 17 wind IPPs have almost not only deviated from the MoUs signed on August 12-14 in 2020 but also from the Master Agreements and refused to sign the amended PPAs as the foreign lenders of said IPPs want power plants installed under the CPEC umbrella to first sign the revised contracts, then they will ink.
The foreign lenders of 17 wind IPPs established under the power policy 2002 want the government to brief them first about the reform programme in the power sector and steps to make the power sector of Pakistan sustainable and secondly want the Government of Pakistan to also get the discount in tariff from the IPPs set up under CPEC, a senior official privy to the latest development told The News.
The official said that authorities have told them that the reforms package in the power sector that has been shared with the World Bank will also be shared with foreign lenders and they are ready to brief them on this front.
This development has put in hot waters the Pakistani authorities, who wanted to decorate their cap with feather of success having discounted tariff in the shape of Rs770 billion in the next 20 years, but with resistance from 18 wind IPPs in signing the amended PPAs (power purchase agreements), the dividends will plummet to Rs660 billion in next two decades if the existing exchange rate of one US dollar against Rs160 is kept in view.
The top official of the Power Division when contacted confirmed the development, saying there is a stalemate with wind IPPs installed under the power policy 2002 but one cannot say right now that they have taken U-turn from MoUs and Master Agreements, as the government is trying to engage them. More importantly, the official sources said the government has decided that those IPPs which are not complying with MoUs will face the music in the shape of due diligence and scrutiny by NAB to know if they have played foul in making illegal money out of their contracts.
So far, 34 IPPs out of 47 have signed amended contracts and the wind IPPs that are showing resistance in assigning revised PPAs, include FFC Energy, Zorlu Energji, Foundation Energy-1, Foundation Energy-II, Sapphire Power, Yunus Energy, Metro Power, Tenaga Energy, Master Energy, ACT Wind, Gul Ahmad Energy, Artistic Energy, Hawa Energy, Jhimpor Power, Tricon Boston Consulting-A, Tricon Boston Consulting-B and Tricon Boston Consulting-B.
The government has already worked out the dues of 47 IPPs at Rs403 billion that it will pay in two installments. And out of Rs 403 billion, the government owes to pay Rs41.096 billion to 17 wind IPPs.
However, the said wind IPPs have not yet signed the amended PPAs and still showing resistance to this effect. However, 34 IPPs, which have signed the amended contracts, would be paid their dues of Rs361.904 billion in two installments.
As far as, the IPPs set up under the CPEC are concerned, Pakistan on December 7, 2020 formally asked China to trim down tariffs of CPEC power projects as done by IPPs set up under 1994, 2002. This all had been put up by the Pakistan side in a meeting held on December 7, 2020 with the newly-appointed Ambassador of China Nong Rong. Federal Minister for Energy Omar Ayub Khan, Chairman CPEC Authority Lt Gen (retd) Asim Saleem Bajwa and Special Assistant to Prime Minister on Power Tabish Gauhar and Secretary Power Ali Raza Bhutta were also present at the meeting.
Pakistan had desired that the IPPs set up under CPEC to get enhanced the tenure of their payment of loans from their lenders in China as it will also provide relief to Pakistan-end consumers in terms of lowering the tariff. And to this effect, it has also been agreed that the Pakistan side will directly engage with the relevant Chinese project investors and banks for a more detailed discussion to review power purchase agreements (PPAs) in the coming days.