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Govt constitutes negotiation committee to address issues of IPPs

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June 8, 2020 (MLN): The Ministry of Energy (Power Division) has formed a sub-committee for negotiation with Independent Private Power Producers (IPPs) to address their issues on the amount, rationale and mechanism of excess payments of the past under specific heads, highlighted in the reports.

The committee is comprised of Chairman Federal Land Commission of Pakistan, Mr Babar Yqoob Fateh Muhammad as Chairman and other members include, Representative of Power Division (not below the rank of a Joint Secretary), Former Chairman of SECP, Mr Muhammad Ali and Barrister Qasim Wadood.

The Chairman of the Negotiation Committee will decide the Secretary to the Committee.

Terms of Reference

  • Engage with various IPPS to negotiate on the amounts, rationale and mechanism of excess payment of the past under specific heads as well as due to systemic oversights highlighted in the reports, reduction of interest rates and payments on debt and other components, the extension of debt tenor, etc and agree on changes required to ensure avoidance of these payments in the future. Excess payments are not restricted to the once highlighted in the report and the Negotiation committee may look into the excess payment which may not have been covered in the Report.

  • Negotiate on a clawback mechanism for sharing efficiency and other gains and savings in the future between power purchasers and IPPs.These may be subject to verification of various cost, implementation of cost accounting order, heat rate fests audit, et as the Committee deems fit.

  • Negotiate with IPPs change of rate and formula of their profits, return on investment and Internal Rate of Return from USD basis to PKR basis without any USD indexation.

  • Negotiate with IPPs with respect to modalities and mechanisms for shifting from Take or Pay contract to Take and Pay contract terms.

  • Negotiate with IPPs on any other terms, conditions, payments, etc

  • Coordinate with MoE (PD), NEPRA, CPPA-G, PHL, PPIB, AEDB, etc for any actions that may be required from theses organizations towards achieving objectives of these ToRs;

  • Document the understanding reached with various IPPs towards achieving the objectives of these ToRs

  • Recommend IPPs which should be considered either for retirement or for a detailed forensic audit.

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Posted on: 2020-06-08T12:14:00+05:00

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