Islamabad-The Wind Power Plants (WPPs) have agreed to reduce Delayed Payment rate by 2.5 per cent, Return on Equity (RoE) to 13 per cent, O&M cost by 20 to 25 per cent. 

A MoU of Understanding (MOU) signed between the Committee for Negotiations with Independent Private Power Producers (IPPs) and the Wind Power Plants (WPPs) representing the 2006 RE Policy projects represented by the Pakistan Wind Energy Association, agreed that WPPs shall coordinate with their lenders and make all efforts to extend the debt-tenor by five years, reduce the spread over LIBOR by 50-75 basis points and reduce the spread over KlBOR by I00-125 basis points. Entire benefit from these changes shall be passed on to the power purchaser, said the copy of the MoU available with The Nation. 

The GoP shall support the WPPs in replacing their current KIBOR based long-term domestic debt with State Bank of Pakistan’s refinancing facility for renewable projects, said the 14 points MoU.

WPPs shall coordinate with their O&M operators and make all efforts to reduce their operation & maintenance cost by 20-25 per cent. WPPs shall reduce their insurance during operations from existing arrangement to actual, subject to a cap of0.7 per cent of EPC cost approved under the respective tariff. 

For WPPs developed under the upfront tariff regime of 2015, tariff sharing will I remain the same for net annual plant capacity factor (“NAPF’’) till the NAPF approved in the respective lenders’ technical advisor report (“P90 level”). For NAPF above the P90 level, the tariff shall be reduced to 50 per cent for the WPP.

In future, the Return on Equity (“RoE”) including Return on Equity During Construction (“RoEDC”) shall be reduced to 13 per cent per annum. The miscalculation of IRR, on account of periodicity of payments, has been addressed through this reduction in return component. The Committee shall recommend to the GoP to explore the possibility of allowing the existing WPPs to develop hybrid wind-solar projects at the existing wind farm sites.

The Committee acknowledges that getting relief from the lenders and the O&M operator will require support from the GoP which shall be provided to the WPPs. For WPPs where Delayed Payment rate (DPR) is set at KIBOR + 4.5 per cent in their existing contractual arrangements, the DPR in all future invoices shall be reduced to KIBOR + 2 per cent for the first 60 days after the due date, and thereafter at KIBOR + 4.5 per cent. Furthermore for all invoices, the purchaser shall ensure that payments (including the DPR invoices) follow the EPA mandated FIFO payment principle.

The Parties acknowledge that cessation/compensation of the curtailment and payment of the receivables of the WPPs is integral consideration of this MoU. The mechanism for cessation/ compensation of curtailment shalI be devised by the WPPs, power purchaser and GoP collectively, whereas the mechanism for outstanding receivables shall be devised by the power purchaser and GoP. 

The power purchaser and the GoP shall ensure adherence to its contractual obligations. The Parties agree that nothing contained in this MoU shall be deemed or be construed as an admission of liability, wrong-doing or improper action on the part of the WPPs. This MoU or any of the terms of this MoU shall not be construed as an alteration or amendment to the EPA or the lA (implementation agreement). 

Once NEPRA, Federal Cabinet and WPPs’ Board of Directors, shareholders and lenders approve the terms of this MoU, the parties shall agree and document details and procedures of these understandings preferably within 30 days, after which the same shall be submitted to NEPRA and CPPA (G), to be followed by legal documentation to reflect the amendments needed in the tariff and relevant agreements.