January 26, 2020 (MLN): Rousch (Pakistan) Power Limited (RPPL), a subsidiary of Power Management Company (Private) Limited (which in turn is a subsidiary company of Altern Energy Limited —AEL), and the Central Power Purchasing Agency (Guarantee) Limited (CPPA-G) have initialled a Master Agreement and a Power Purchase Agreement (PPA) Amendment Agreement in furtherance to the Memorandum of Understanding (MoU) executed on August 12, 2020, between the Company and the Committee for negotiating with IPPs.
According to the notice issued to PSX by AEL, these Agreements have been initialled by RPPL, upon the request of the Government of Pakistan ("GOP"), in the larger national interest and in order to maintain the sustainability of the power sector.
Pursuant to the initialled terms of these Agreements, without prejudice to the terms of its generation license, RPPL will have the option to participate in the GOP's scheme to create competitive power markets, via the Competitive Trading Arrangement ("CTA"), once the CTA is implemented and becomes fully operational.
CPPA-G shall assist and support RPPL in entering into a firm Gas Supply Agreement with the Gas Supplier by December 31, 2021.
RPPL and CPPA-G have resolved the dispute of Liquidated Damages ("LDs") levied by CPPA-G on RPPL in 2013 and 2016 as a part of the PPA Amendment Agreement.
Payment of Outstanding receivables as on 30th November 2020 remains an integral part of the Agreements and a plan is being devised to pay off the Company's overdue receivables through cash and financial instruments (the "Payment Mechanism"),
Upon payment of first instalment and till the date RPPL receives its final instalment as per the Payment Mechanism, RPPL shall submit its invoices providing the following discounts in tariff, comprising existing capacity payments and variable O&M shall be reduced by 11% and USD exchange rate and US CPI indexations shall apply on reduced variable 0 & M and 50% of the reduced Escalable Component of the Capacity Purchase Price (collectively referred to as the "Tariff Discount").
On the remaining 50% of the reduced Escalable Component of the Capacity Purchase Price, the current indexation shall continue to be applied until the date the applicable exchange rate under the Tariff reaches PKR/US$ of 168.60, after which this will cease to escalate;
In lieu of the Tariff Discount as detailed above, any heat rate sharing by RPPL per its existing arrangement under the PPA shall cease to exist.
The final terms of these Agreements and their execution are subject to receipt of requisite approvals including inter alia the approval of the Federal Cabinet, RPPL's Board of Directors and RPPL's Shareholders.
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