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Govt, KE moving towards new PPA - Inside Financial Markets

Govt, KE moving towards new PPA

– Business Recorder

The Federal Government and Karachi Electric (KE) are said to have been inching towards a long-waited settlement on new Power Purchase Agreement (PPA) and Arbitration Agreement, after a long deliberation, well informed sources told Business Recorder.

This progress was witnessed at a meeting at Governor House in Karachi just a week after Prime Minister Imran Khan’s very important visit to Saudi Arabia, wherein he was also accompanied by Governor Sindh Imran Ismail.

On April 5, 2021, Managing Director, Investments of Saudi Arabia’s Aljomaih Holdings Co, Abdulaziz Hamad Aljomaih, in a letter to Prime Minister, Imran Khan had accused Special Assistant to Prime Minister on Power and Petroleum, Tabish Gauhar of making deliberate attempts to disrupt KE’s issues settlement process. Aljomaih also met Prime Minister in recent months as well as with former Finance Minister, Dr Abdul Hafeez Shaikh and newly appointed Finance Minister, Shaukat Tarin.

However, Tabish Gauhar had refuted charges levelled by Abdulaziz Hamad Aljomaih, saying that KE has hired a PR agency to malign him.

On Sunday, Minister for Energy, Hammad Azhar in a tweet said: “I am glad to announce that the Federal Government and KE have today (Sunday) agreed upon principles to resolve most of their long-standing disputes regarding additional supply, payment procedure and subsidy disbursement. We will be swiftly moving towards signing of a new PPA.”

On May 5, 2021, the issue of new PPA came under discussion and the government sent a message to KE management through media that it will give a last chance to resolve disputes with government entities otherwise it will consider taking over KE. The government argued that it was already supplying over 1300MW electricity to KE but being paid only for 650MW electricity. However, KE claimed that no such signals have been sent to it.

Interestingly, the Minister who floated the proposal of taking over KE was also amongst the Government team which held parleys with the KE management.

The ECC’s decision of May 5, 2021, will also be considered and ratified by the Federal Cabinet, in its meeting on Tuesday (tomorrow).

When contacted for comments on meeting between GoP team and KE, KE Spokesperson said KE leadership met with members of the Inter-Ministerial Committee and senior government officials on Sunday. The company apprised the committee of the challenges faced as well as an update on progress of ongoing projects.

During the meeting the Government of Pakistan representatives reaffirmed their commitment to the people of Karachi and indicated that the Power Purchase Agreement (PPA) will be signed shortly, whereas the Terms of Reference (ToR) document for arbitration of the long-standing dispute on payments will also be finalised in the next few days, the spokesperson added.

Energy Minister, the spokesperson maintained, expressed satisfaction at the supply of electricity to Karachi during the month of Ramazan and over the period of Eid. KE also “extended its heartfelt gratitude to the Government of Pakistan – particularly the Power Division, Ministry of Energy, Ministry of Finance, and the Inter-Ministerial Committee – for their commitment and consistent support that enabled KE to better serve its customers.” Tabish Gohar who is opposing the principle of “fairness and equity” was not available for comments.

Syed Zaki Hussain

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