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May 19, 2021

Officials to get NAB’s nod to clear 40pc dues of 12 IPPs

ISLAMABAD: After the federal cabinet here on Tuesday accorded approval to the amount of Rs89.86 billion to be doled out to 35 IPPs out of 47 as the first installment, the top officials of the government have started working to offload 40 percent dues of the leftover 12 IPPs set up under the 2002 power policy which are facing NAB investigation for making alleged excess profits. Once it is done, it will make the revised contracts a success story.

To this effect, the top man of the PTI government would play a role to get a nod from the NAB in proper language acceptable to the top bureaucracy in both the Power and Finance

Divisions for releasing the 40 percent dues to the remaining 12 IPPs.

The NAB is at present investigating the IPPs set up under the 2002 policy on allegedly making excess profits. The 12 IPPs include Engro Power, Foundation Power, Orient Power, Saif Power, Sapphire Electric, Halmore Power, AGL Power, The Hubco Narowal, Atlas Power, Nishat Power, Nishat Chunian and Liberty Tech. And their total dues, which are to be paid in two installments, stand at Rs145.7 billion. The said IPPs are asking for payment of 40 percent of their dues, which are Rs58.40 billion.

Under the amended agreement, the government was to clear 40 percent of the total dues of 47 IPPs as the first installment and the remaining 60 percent will be paid as the second installment within six months time. The total dues of 47 IPPs stand at Rs403 billion. After payment of 40 percent of the dues, the amended PPAs (power purchase agreements) will be effective. Under the latest scenario, the government, after getting a nod from the federal cabinet, will immediately start paying Rs89.86 billion to 35 IPPs set up under pre and under 1994, 2006 power policies as the first installment and their altered tariff will be effective.

Insiders in power corridors confided to The News that Finance Minister Shaukat Tarin and Energy Minister Hammad Azhar had assured the entrepreneurs of 12 IPPs that they would take up their issue with Prime Minister Imran Khan after he came back from Saudi Arabia and would ask the top man to play his role in persuading the NAB not to erect hurdles in the implementation of amended deals also done with 12 IPPs. The government has estimated the benefit of Rs836 billion in the shape of discounted tariff with all the 47 IPPs in the next 20 years, the remaining period of their contracts.

“We are expecting that the PM's Office will now play its role and will get a letter from NAB in a reasonable language acceptable to the top bureaucracy of Finance and Power Divisions. The bureaucracy is not inclined to pay 40 percent dues as the first installment to 12 IPPs, arguing they cannot face music from the anti-graft body and they will only start paying when the NAB gives a letter with no objection to payments,” the top sources said.

They said that some in 12 IPPs will not be bound to obey the amended power purchase agreements after June 07, 2021 -- the deadline for payments of the first installment, so it is mandatory for the government to offload 40 percent of their dues before the deadline if it wants to make the new contracts effective and make it a success story.

Some entrepreneurs of 12 IPPs, on being asked about the delay in payment of 40 percent of their dues, told The News that the government side had given positive signals.

It is pertinent to mention that the government has so far failed to form a tribunal as was agreed in the amended contract to decide the issue of Rs53 billion i.e. the excess profit allegedly minted by 12 IPPs.