IPPs reject to accept proposed payment of Rs 400 billion

November 25, 2020 (MLN): In a new development, Independent Power Producers (IPPs) Tuesday refused to accept the proposed payment of Rs 400 billion from the federal government in three years, which is a breach of a memorandum of understanding (MoU) signed between them.

According to Business Recorder, the government team has not disclosed any template of agreements with IPPs and has only expressed its intention. IPPs have been asked to consult their board and submit their suggestions. The templates are expected to be shared with 47 IPPs before December 4, 2020.

The government team includes Special Assistant to the Prime Minister for Power, Tabish Gohar, Chairman Federal Land Commission Babar Yaqub Fateh Mohammad, Secretary Power, Ali Raza Bhutta, ISI officials, Acting CEO CPPA-G, CFO and CPPA legal expert, discussed with IPPs established under Power Policies 1994 and 2002.

The government expects a monetary gain of Rs 840 billion over 10-12 years. Minister for Planning, Development and Special Measures Asad Omar said that revision of agreements with IPPs would reduce electricity prices by Rs 1.40 per unit. He said that in 2022, the price will be reduced by 74 paise per unit while in 2023 it will be reduced by 66 paise per unit. Consumers will get a total relief of Rs 300 billion.

The government has indicated to the IPPs that it will clear their dues in three installments over a period of three years, i.e. 33 percent upfront and remaining two installments in three years which have been rejected by the IPPs, said Business Recorder.

Business Recorder said that the IPPs have agreed to the revised terms and conditions on the promise that all the outstanding amount would be cleared in one go but now the government is not willing to pay full payment on the plea that IMF will not allow and hence IPPs are not happy and will not show any flexibility from now onwards.

Copyright Mettis Link News