June 2, 2021 (MLN): The first tranche payment amounting to Rs89.9 billion to Independent Power Producers (IPPs) is set to expire on June 07, 2021.
Due to the unavailability of a clearance certificate from the National Accountability Bureau (NAB), the government missed the deadline as the 70 days Cure period started on March 29, 2021.
The Power Division was supposed to pay 40 % dues of Rs85 billion to eight leading IPPs including HUBCO, KAPCO, Rousch, Fauji, PakGen Power, Lalpir Power, KEL and Saba Power by March 29.
To recall, on May 5, 2021, Power Division presented a summary before Economic Coordination Committee (ECC) seeking approval of Rs89.86 billion to pay 40% dues as the first installment to 20 IPPs through a 33.33% cash payment and the remaining 66.67% to be cleared through floating PIBs and Sukuks.
It was also decided that the second tranche would clear the remaining 60% under a similar payment mode after six months. However, this decision was subject to approval by the Cabinet, which ratified the decision on May 18, 2021.
According to the research report by Al Habib Capital, out of Rs89.96bn, Rs23.2bn and Rs39.5bn will be paid to HUBC and KAPCO. To note, the said IPPs are under Power Policy pre-1994. Moreover, six IPPs under Power Policy1994; Rousch Pakistan Power Ltd, Fauji Power Plant, PakGen Power, Lalpir Power, K Electric, Saba Power will get Rs6.7bn, Rs1.8bn, Rs6.5bn, Rs6.2bn, Rs2bn, Rs0.17bn, respectively while Rs4.2bn will be paid to12 IPPs under 2006 RE (Renewable Energy).
As per the agreement between the IPPs and Government, “the Company shall suspend giving Tariff Discount from the date of default; provided, however, if such default is not cured within a period of seventy (70) Days, the Company shall have the right to terminate this Amendment by seven (7) Days’ Notice, with no rights and obligations of either party arising out of the termination of this Amendment. Termination of this Amendment shall not affect the accrued rights of the Parties”.
Since the ‘Cure Period’ for payment to IPPs is due to end on Monday, June 07, 2021, hence payment to IPPs has to be made by that date or earlier to avoid the possibility of ‘termination of the Amendment by IPPs to their PPAs, the report said.
Copyright Mettis Link News
41471
