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ECC likely to approve payment of Rs89.86 billion to 20 IPPs - Inside Financial Markets

ECC likely to approve payment of Rs89.86 billion to 20 IPPs

– The News

The Economic Coordination Committee (ECC) that meets today (Wednesday) is most likely to approve a summary of the Power Division seeking approval of Rs89.86 billion for the payment of 40 percent dues as the first installment to 20 IPPs.

The remaining 60 percent payment will be paid in six months. And the implementation of their amended contracts will be effective after the payment. So far, the government has signed MoUs with 47 IPPs out of which it has signed amended contracts with 32 IPPs. After 40 percent payment of their dues amounting to Rs403 billion to all the 47 IPPs, their amended contracts will be effective yielding dividends of Rs836 billion in the next 20 years as discounted tariffs.

In the first phase, the Power Division asked the ECC for supplementary grant of Rs89.86 billion to pay the 40 percent amount to two IPPs set up under pre-1994 Power Policy, six IPPs under 1994 Power Policy and 12 IPPs under 2006 RE (Renewable Energy) Policy including bagasse, wind and solar. The government included Rs4 billion more in the summary to be paid to 12 renewable IPPs set up under the 2006 power policy. The government on March 29 missed the deadline to pay the 40 percent dues of Rs85 billion to 8 IPPs, including HUBCO, KAPCO, Rousch, Fauji, PakGen Power, Lalpir Power, KEL and Saba Power. The payment could not be made because of non-availability of a clearance certificate from NAB. The government, after technically defaulted on March 29, 2021, to 8 IPPs still have 70 days since March 29 to cure the default.

A summary was submitted to ECC by the Power Division on 17th February, 2021 but its consideration was deferred till the next meeting. The summary was again placed on the agenda of ECC on 10 March, 2021 but was deferred once again. Since additional events had taken place, the summary was deferred by the ECC on 7 April, 2021. This summary has not been brought on the agenda of ECC afterwards. Since the submission of the summary dated 6 April, 2021, the FBR looked into “taxations of the contractors at the rate of 4% of the relevant payment” for the IPPs under the 1994 Policy.

However, the IPPs set up under 2002 policy are not in the list to be paid 40 percent payment of their dues unless the NAB completes its probe.

Syed Zaki Hussain

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