ISLAMABAD: Amid the stalemate with 47 IPPs over the newly worked-out payment mechanism and resolution of disputed issue of excessive profits of Rs53 billion, the wind IPPs have communicated to the government in plain words that they will not sign MoUs unless and until curtailment of power evacuation from them is ensured.
Some 47 IPPs signed the MOUs on August 13, 2020 paving way to signing the amended power purchase agreements, in six months ending in February 12, 2021. Once the amended PPAs are signed, the government will mop up the gains of Rs836 billion in the shape of discounted tariff of IPPs in next 10-12 years. However, wind IPPs have refused to sign MoUs blindly, arguing if the government wants them to sign MoUs, then it will have to give written assurances that it will never curtail the electricity evacuation to the national grid from them.
“And if the government does not evacuate the power of wind IPPs at a time when the wind turbine is generating electricity in the presence of blowing wind, then it will have to pay full tariff to them.
Otherwise, IPPs will not sign the MoUs which 47 IPPs have inked,” a senior official privy to the development told The News. In other words, foreign investors of most of the wind projects have asked the government to treat the wind IPPs as ‘Must Run’ projects. The government is currently engaged with six renewable IPPs that include TNB Liberty, UCH Power, Zephyr power wind, China Three Gorges, Laraib Energy and Star Hydro Patrind.
More importantly, three hydropower projects that include Bong, Patrind and Gulpur are still evasive of signing the MoUs and unless and until the six renewable and three hydropower project join the batch of 47 IPPs, there will be no meaningful success in getting the dividends of Rs836 billion as tariff discounts in the remaining period of their contracts. Under the newly worked-out payment mechanism, the government wants to clears the dues of IPPs amounting to Rs452 billion in one year time with upfront one third cash payment at the time of signing of amended PPAs and other two installments in the form of Pakistan Investment Bonds (PIBs) or tradable bonds within one year time. The IPPs are not willing to trust the government on the payment mechanism of their dues arguing that in the past, the government had defaulted on sovereign guarantees. They want the whole payment in cash. However, sources claim that IPPs will agree on the newly worked-out payment mechanism if there is 50 percent upfront payment in cash, but in that case IPPs will seek the payment mechanism supported with some ‘reliable guarantee’.
However, the most irritating issue mentioned in the Mohammad Ali Report is ‘excess profit’ minted by six IPPs. The government wants to refer this issue to NEPRA to carry out due diligence if some IPPs have mopped ‘excess profit’.
The said IPPs have also filed the case in Islamabad High Court on the issue of excess profit and the government wants them to withdraw the case. Now the question arises if the government will take the risk to move NEPRA for resolution of excess profit knowing that the case is in the court of law.
The IPPs facing blame of minting excess profit of Rs53 billion, argue that power plants installed under power policy 2002 have the same power purchase agreements (PPAs) and have same tariffs as per PPAs. How can some pocket the excess profit and others not. The said six IPPs also argued that in case of such kind of dispute, the solution lies with the arbitration as per PPAs, not with the NEPRA.
