For converting the MoUs signed with the IPPs into final legal agreements, the government is currently engaged in finalizing the templates and to this effect the IPPs are also on board. According to a senior official, the government team will soon invite the IPPs’ CEOs to get the templates for final amended Power Purchase Agreements (PPAs) approved.
Under the MOUs signed, the government has managed to introduce with the consent of IPPs material changes in the existing PPAs that will yield reasonable dividends amounting to Rs835 billion in the next 10-12 years. The main clause of the agreement of 15pc profit plus dollar offered to IPPs under the previous power policies has been changed to 17 percent rate of return with Pak Rupee indexation. And IPPs will be paid the profit as per value of dollar at Rs148. However, the rate of return of foreign funded IPPs has been reduced from 15 percent to 12 percent with US dollar indexation.
As per the MoUs, the agreements based on take or pay mode will be converted into those based on take and pay only when the competitive market system having multi-buyers of electricity being generated by IPPs is established and becomes operational.
The IPPs, under the MoUs, had set the condition that they would only sign the amended agreements when their dues got cleared. The senior official said that to this effect, out of four templates, one has almost been finalized.
But the main issue the government is facing is as to how it should clear the dues of Rs392 billion to the 50 IPPs. “Once the financial tool under which the huge amount is to be paid gets finalized, then the template for offloading the arrears with a time-frame will be made, supported with some guarantees.”
