41 out of 47 IPPs initial master agreements

ISLAMABAD: In a positive development, 41 out of 47 IPPs that signed MoUs with the government in August 2020 have so far initialed master agreements, paving the way for their discounted tariff of Rs 836 billion in next 10-12 years.

Six IPPs are still away in the wake of a dispute over resolution of excess profits of Rs 53 billion from initialing the master agreements legally binding contracts. Under the MoUs, the government is bound to finalize the timeframe before February 12 with IPPs for clearance of their dues amounting to Rs 450 billion and out of it, the amount of Rs 53 billion had been detected in the Mohammad Ali report as excess profits illegally minted by six IPPs. The government wants to pay the whole dues of IPPs within 6 months with 40 per cent payment at the time of signing of amended power purchase agreements (PPAs) and the remaining payment after 6 months. The government negotiation teams and 18 x more leading IPPs, including KAPCO (Kot Addu Power Company, the biggest IPP having a capacity of 1600MW of electricity and 17 x wind IPPs on Saturday agreed on master agreements legally binding contracts. Both parties have reached an agreement to reduce the tariff and other concessions as per an MoU signed in August 2020. Formal signatures will be done between the government officials and IPPs after approval of the federal cabinet and the board approval of respective IPPs. And the ECC and federal cabinet are likely to approve these IPPs agreements next week.

The 17 wind IPPs which initialed master agreements include Younas Energy, Metro Power, Tenaga Energy, Master Energy, ACT, Gul Ahmad, Artistic Energy, Hawa Energy, Jhimpir Power, Tricon Boston Consulting (A), Tricon Boston Consulting (B), and Tricon Boston Consulting (C). The 6 remaining IPPs that had earlier sought the resolution through an expert panel have been asked to get the issue resolved through NEPRA. The government had walked away from the commitment of setting up the experts panel, arguing that it will be the breach of the MoUs signed in August 2020. The IPPs said under the existing PPAs, the solution lies with the arbitration court. They said they do not want the NEPRA to decide the issue as it is a party to the dispute in a court of law.

The government says the resolution of the excess profits through the 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 opposed the experts panel. They said if the government concedes on this issue, it will be tantamount to giving an ‘NRO’ to certain IPPs. The cabinet members said whatever has been agreed and signed in the MoUs must be implemented in letter and spirit.