ISLAMABAD : Prime Minister, Shehbaz Sharif has said that Government has identified an additional 15 to 20 IPPs for similar settlements in the second phase, for which spadework had already been initiated in consultation with all stakeholders to ensure a cohesive approach.
Sharing his views with the Cabinet, he added that the reworking with the IPPs would reduce power costs’ which would give a great impetus to economic growth and stability.
On termination of pacts with five IPPs, Power Division apprised that subsequent to the letter from the System Operator, confirming that the plants had negligible dispatch and were no longer required for power system operations, negotiations were carried out with these IPPs to terminate their Power Purchase Agreements (PPAs) and Implementation Agreements (IAs) in order to avoid payment of future capacity payments.
The Power Division further informed that after various rounds of discussions and meetings between the Task Force and sponsors of the five IPPs i.e. Hub Power Company Limited (HUBCO), Lalpir Power Limited, Saba Power Company (Private) Limited, ROUSCH (Pakistan) Power Limited, ATLAS Power Limited, agreements were reached to terminate the PPAs/IAs through Negotiated Settlement Agreements (NSAs) with these IPPs on the following broad principles: (i) cease payment of capacity payments from October 2024 by terminating the PPAs and lAs; (ii) no termination compensation to be paid under the IA; (iii) in line with their contracts, IPPs will retain the power plants being built under Build Own Operate (BOO) basis, except for Rousch Power Limited which will be transferred to the Government of Pakistan or its designated entity by December 31, 2024 as it was built under Build Own Operate and Transfer (BOOT) basis; (iv) payment of past CPP, EPP, GST, insurance and pass-through items will be made; (v) past late payment interests will be waived; (vi) no payments will be made in respect of expert determinations and arbitration awards in favour of these IPPs, if any; and (vii) IPPs, Government of Pakistan and Power Purchaser shall waive all their rights and claims under the PPA and IA.
The Cabinet was further informed that agreements signed with all five IPPs were based on these broad principles.
Salient features of the terms and conditions of each IPP were also placed before the Cabinet . Power Division briefly apprised the Cabinet on the specific features relevant in case of the five IPPs as follows: HUBCO : Under the NSA with HUBCO, besides the abovementioned principles, the following was further agreed: (i) interest claimed by HUBCO under the first fill award which was decided in favor of HUBCO by the arbitrator amounting to approximately Rs. 17 billion is waived under the NSA; (ii) payables to PSO by HUBCO under FSA will be assigned to the Power Purchaser which will be settled against accrued late payment interest under the PPA and reversal of first fill under arbitration award; and (iii) insurance for the FY 2024-25 will be paid to the Company for the first four months only.
Rousch : under NSA with Rousch, in addition to the principles the following was agreed: (i) being on BOOT basis, the Company will transfer the Complex to Government of Pakistan or its designated entity at one USD which will be paid in equivalent PKR at the prevailing exchange rate; (ii) The Company will be paid Rs 5.5 billion in lieu of OFME period due to early termination; and (iii) The Company will be paid Rs 2.8 billion for preservation of the Complex till the transfer to Government of Pakistan or its designated entity. ATLAS Power : under NSA with Atlas Power, in addition to the principles following was agreed: (i) The Company has agreed to adjust Rs.4.763 billion of past savings in fuel, O&M, and inventory gains (up to 30,h September 2024). In lieu of this payment by the Company, the Arbitration between Atlas Power and Government of Pakistan shall be withdrawn.
The Cabinet was apprised that in furtherance to the assignment of Pakistan State oil (PSO) payables under FSA to the Power Purchaser by HUBCO, the power purchaser and PSO had agreed through an agreement that PSO, in view of the national interest and savings to the country due to termination of agreements with the five IPPs, shall waive its right in respect of late payment interest. The Power Purchaser shall make payment to PSO of the principal amount of approximately Rs. 14.8 billion, which would be adjusted against the accrued late payment interest under the PPA with HUBCO and reversal of first fill deduction under the arbitration award.The Power Division informed that as per estimation of the Task Force, the negotiated settlement and termination would save future capacity payment and allied payments amounting to Rs. 411.16 billion.
Approval of the Cabinet was solicited to the following: (i) approve the Negotiated Settlement Agreements with five IPPs and make agreed payments of past CPP, EPP, etc. to these IPPs within the time agreed in NSAs; (ii) approve the agreement of assignment of payables between CPPA-G and PSO and authorize CPPA-G and PSO to execute the same ;(iii) authorize PPIB and CPPA-G to execute the NSAs with HUBCO, Lalpir, Saba and Rousch Power;(iv) authorize PPIB and CPPA to execute the NSA with Atlas Power after incorporating the WWF/WPPF and sales tax apportionment clause in line with NSAs with other IPPs; (v) approve Technical Supplementary Grant of Rs. 308 million to meet the accrued and future expected expenses of the Task Force ;(vi) designate NPPMCL to take over the Complex and Site from Rousch Power as per NSA ; and ( v) authorize the Task Force to nominate names for the Committee to take over the Complex and Site from Rousch Power.
