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January 22, 2021

Power tariff: Six more IPPs agree to sign MoU with govt

Top Story

January 22, 2021

ISLAMABAD: As many as 19 Independent Power Producers IPPs -- out of 47 -- have agreed to the legally binding contracts with the government after six more IPPs initialed the Amended Power Purchase Agreements on Thursday. However, 13 IPPs led by Mansha Group is seeking resolution of excess profits of Rs55 billion through experts’ panel.

Three leading IPPs: Orient Power, Sapphire and Halmore installed under the 2002 power policy led by SAPM on Petroleum Nadeem Babar, who has majority shares in Orient Power and Oursun, had first initialed the amended PPAs. They prefer NEPRA to settle the contentious issue.

“The signing of the agreement between government officials and IPPs will be held after approval by the federal cabinet and their respective boards. Earlier, solar and bagasse based power plants signed amended PPAs.” Similarly six more IPPs including Saba, Lalpeer, PakGen, Engro, Atlas, Saif installed under 1994 and 2002 power policy initialed the Master Agreement on Thursday.

The government backed out of its commitment with the IPPs led by Mansha Group to constitute the experts penal to resolve the excess profits amounting to Rs53 billion allegedly minted by some IPPs, a senior official confided to The News. The negotiations with Attorney General Office had led to the decision that IPPs and government would propose one judge each from Supreme Court, besides a neutral judge from abroad will be hired for the Experts Panel to decide the issue in 6 months. “Now the government has decided that the issue will be decided by NEPRA,” the official said.

The official said that among the IPPs facing allegations of generating illegally excessive profits, Attock Gen is facing the charges of pocketing illegal profit Rs12 billion, Nishat Power Rs7.5 billion, Nishat Chunian Rs9 billion, Liberty Power Rs10 billion, and Uch Power Rs5 billion.

The IPPs seeking resolution through Expert Panel confirmed that the government has walked away from the commitment as some powerful cabinet members apprehend that the Mohammad Ali report on IPPs will be thrown away by the Experts Panel. They said under the existing PPAs, solution lies with arbitration court. They said that they do not want NEPRA to decide the issue as it is a party to the dispute in a court of law.

The government says Expert Panel will be tantamount to deviation from the MoUs signed by 47 IPPs in August 2020. In a recently held federal cabinet meeting, many ministers strongly opposed the Experts Panel. They said if the government concedes on this issue then it will be tantamount to giving NRO to certain IPPs. The cabinet members said whatever has been agreed and signed in MOUs must be implemented in letter and spirit.

Now the government has also included some gas based IPPs in the list of those who minted excess profits which increased from Rs53billion to Rs55 billion. The number of such IPPs has increased to 13 now.

However, one of the members of the government negotiating team said if NEPRA gives a decision that is not acceptable to IPPs, then they still have the right to move to Pakistan and London based arbitration courts.

“The government has agreed to pay dues of Rs450 billion in less than 12 months but the modalities are being worked out in the Finance Ministry,” the official said.