ECC okays security package for coal power projects

ISLAMABAD: The Economic Coordination Committee (ECC) in its meeting here on Wednesday approved the Standardised Security Package Documents for coal power projects under the power generation policy 2015 under which power plants will now be entitled to charge capacity payments with Return on Equity reduced by 20%.
According to the document available with The News, it was proposed in the power purchase agreement (PPA) that in case the plant is not available for power generation purely in the wake of non-availability of fuel at site mainly because of the delayed payments by the Power Purchaser for consecutive 90 days (for local coal) and 150 days (for imported coal), the company will be eligible for Capacity Payments, less up to 50% Return on Equity (ROE) component of the tariff. However, the sponsors have generally not agreed to reduction in the ROE component as suspension of power generation will be a result of default in payment by power purchaser. But the Ministry of Water and Power advocated for the capacity payments with Return on Equity reduced by 20%.
Under the decision of ECC, the revolving account equal to 22% of monthly invoicing for the China-Pakistan Economic Corridor (CPEC) Power Projects will be opened and maintained by the Power Purchaser for which the Ministry of Finance will provide the guarantee to fund such Revolving Account in case the Power Purchaser fails to place and or maintain the required funds in such account.
The Private Power Investment Board (PPIB) will be authorised to make and approve any project specific amendments in the Standardised Coal Security Package Documents required during negotiations provided the government obligations or liabilities are not increased.
The PPIB will also be authorised to make and approve any amendments in the Coal Security Package Documents required to comply with Nepra’s, Tariff Determination.The document of the summary pitched before ECC also says that since the Power Generation Policy 2015 provides an option to the investors or sponsors holding valid LOIs under the Policy for Power Generation Projects 2002 to continue with the same policy, these Standardised Security Package Documents (except for certain specific provisions as contained in the Policy 2015) will be applicable to such projects, with the modification that in case of delay in payments the applicable delayed payment interest shall be reduced from Kibor plus 4.5% to Kibor plus 2%.