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January 18, 2021

MoU signing by wind IPPs in jeopardy

National

January 18, 2021

ISLAMABAD: In a new development, the signing of MoUs by wind IPPs is in jeopardy as the government has temporarily stopped the ongoing talks with the wind power plants initiated for persuading them to ink MoUs on the pattern of 47 IPPs that earlier signed on August 12-14, 2020, arguing that the foreign lenders are reluctant to give a nod for the signing of new contracts.

“We have asked wind IPPs to first get go-ahead from their lenders, then both sides will initiate talks,” a senior official involved in talks with the IPPs told The News. He also said that the government negotiating committee will, meanwhile, emphasize on the ongoing talks with 47 IPPs on the payment mechanism to ensure conversion of MoUs into amended PPAs before February 12, 2021.

The chief executive officers (CEOs) of the wind IPPs have told the government negotiating team that they need to get a nod from their foreign lenders who are reluctant to sign MoUs without having some assurances from the government.

“Wind IPPs also linked their willingness to sign new contracts with the written assurance from the government side that the Central Power Purchase Agency (CPPA) will purchase 100 percent electricity to be generated by wind power plants and no curtailment in evacuation of electricity from wind IPPs will be tolerated.” At present, the CPPA sometimes curtails the procurement of electricity from the wind IPPs when they generate and this is how wind power plants sustain financial damages.

The official said there is a lacuna in the PPAs of wind power plants because of which the CPPA takes advantage and prefers to procure the electricity from load -based power plants knowing the fact that the wind plants are 'must run' projects.

The official said that he fully agreed to the contention of the wind IPPs if the government does not evacuate the power of wind IPPs at a time when the wind turbine is generating electricity in the presence of blowing wind, then CPPA will have to pay full tariff to them.

“Otherwise, IPPs will not sign the MoUs which 47 IPPs have inked," the official said, adding that foreign investors of most of the wind projects have asked the government to treat the wind IPPs as ‘Must Run’ projects.

The government was earlier engaged with six renewable IPPs that include TNB Liberty, UCH Power, Zephyr Power Wind, China Three Gorges, Laraib Energy and Star Hydro Patrind. The six IPPs have capacity to generate 1,200 MW of electricity but in future the role of renewable plants will have more electricity generation capacity and keeping in view the importance of renewable power plants, the government should accept the demand of wind IPPs.

More importantly, three hydropower projects that include Bong, Patrind and Gulpur are still evasive in signing the MoUs. China Three Gorges wind power plant is also evasive of signing MoUs.