Agreements with IPPs to be reviewed under NAB advice

Govt will renegotiate master agreement with power producers registered under Power Policy 2002

Islamabad   -  The government has decided that the agreements with IPPs under Power Policy 2002 will be reviewed in the light of NAB advice and government will renegotiate the master agreement with power producers registered under the said power policy. 

The decision was taken in the meeting of the Cabinet Committee on Energy (CCOE) held under the Chairmanship of Federal Minister for Planning, Development and Special Initiatives Asad Umar here on Thursday. Power Division submitted a summary regarding Validation Process of IPPs Agreement. The committee after detailed discussion approved the proposal that the agreements with 2002 IPPs finalised by the Implementation Committee be reviewed in the light of NAB advice in the M/S Nishat Chunian Power Ltd case. It was further decided that the Implementation Committee will be revived and a representative of Law Division will be included in its composition. The revived Implementation Committee will re-negotiate the Master Agreements with IPPs of 2002. The outcomes of re-negotiations by the implementation committee will be submitted to the CCoE. 

As per the summary submitted by the Power Division to the committee, the CCOE had constituted an Implementation Committee on 24th September 2020 for implementation of MOU with IPPs, CCOE and ECC considered the report by Implementation Committee and approved the payment mechanism and agreement with IPPs on 8th February 2020 and the same was ratified by the Cabinet. On a summary submitted by Power Division ECC decided and Federal Cabinet ratified the following decision of the ECC on 18” May 2021 that “Payments to all IPPs (under Pre-1994, 1994 and 2006 Power Policy) may be processed according to the signed agreements except the [IPPs under Power Policy 2002 till conclusion of the NAB investigation, said the summary available with The Nation. 

The matter of the alleged saving in the tariff component of IPPs of 2002 Policy is already under investigation by NAB. NAB  may be requested to examine and validate the process of negotiations and signing of agreement including Arbitration Submission Agreement. The bureau 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. In response NAB declined to examine or validate the process or to inform if they have any objection to these or making payment to IPPs under these agreements. In view of the previous decisions by ECC and Federal Cabinet and response  from NAB, Power Division submitted s summary for the consideration of ECC with proposed that the payments to IPPs (under Power Policy 2002) may continue to be withheld, and the process of signing Arbitration Submission Agreement with these IPPs and notification of their revised tariff as determined by NEPRA may remain pended till NAB investigations are Concluded. However, the agenda was deferred. NAB has now informed  that illegal gain of Rs.8.36 billion has been established against M/S Nishat Chuniaan Power Ltd, due to determination of tariff at the higher side.

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