ECC to take up examination, validation of process of IPP Agreement

Staff Report

ISLAMABAD:

Federal cabinet’s economic coordination committee (ECC) in its today’s meeting is taking up examination, validation of process of Independent Power Producers (IPPs) agreement.

According to sources, ECC scheduled today (Wednesday) is set to take up a summary of the power division titled as examination, validation of process of IPP agreement. They said that Power Division has decided to stop payment to all those power plants which were established under Power Policy 2002. They said more than Rs 250 billion worth payments was to be made to the IPPs of 2002 Power Policy. National Accountability Bureau (NAB) has not ratified signing new agreements, and payments to the IPPs established under Power Policy 2002, said sources.

As per sources, in view of the previous decision by ECC and federal cabinet and response from NAB, following proposals are submitted for the consideration of ECC:

1. Payment to all IPPs under Power Policy 2002, which have signed agreements pursuant to MoUs, may continue to be withheld, till the NAB investigations are concluded;
2. The process of signing Arbitration Submission Agreement with IPPs of 2002 policy and notification of their revised tariffs as determined by NEPRA may remain suspended till NAB investigations are concluded.

It is pertinent to mention that Cabinet Committee on Energy (CCoE) and ECC considered the report of Implementation Committee and approved the payment mechanism and agreements with IPPs in meeting held on 8^th February 2021 and the same was ratified by the Cabinet on 9^th February 2021.

On a summary submitted by Power Division on 5^th May 2021 decided and federal cabinet ratified the following decision on the ECC on 18^th May

1. Payment to all IPPs under Pre-1994, 1994 and 2006 Power Policy) may be processed accordingly to the signed agreements expect the IPPs under Power Policy 2002 till the conclusion of the NAB investigation.
2. The matter of the alleged saving in the tariff component of IPPs of 2002 Policy is already under investigation by National Accountability Bureau (NAB). NAB may be requested to examine and validate the process of negotiations and signing of agreements including Arbitration Submission Agreement. NAB may also inform if they have any objection to the signing of these agreements and making of payments to the IPPs of 2002 Policy.

Power Division accordingly conveyed the decision of ECC, as ratified by the federal cabinet to NAB on May 25, 2021. In response to the letter by Power Division, NAB has shared their views through their letter dated June 08, 2021. The cabinet decision referred above required examination and validation of the process already completed by the Power Division. Whereas NAB agree that IPPs of 2002 Policy are under investigation, they have declined to examine or validate the process, or to inform if they have any objection to these agreements or making payments to IPPs under these agreements.