Payment to IPPs established under 2002 policy: ECC defers decision

The Economic Coordination Committee (ECC) is said to have deferred its decision regarding payment to Independent Power Producers (IPPs) established under Power Policy 2002, well-informed sources in Finance Ministry told Business Recorder.

Sharing details, sources said, the Power Division informed the ECC on June 16, 2021 that Cabinet Committee on Energy (CCoE) and ECC considered the Report by Implementation Committee and approved the payment mechanism and agreements with IPPs in meetings held on February 8, 2021 which was ratified by the Cabinet on February 9, 2021.

On a summary submitted by Power Division on May 5, 2021 ECC decided and Federal Cabinet ratified the following decisions of the ECC on 18 May, 2021: (i) payments to all IPPs (under Pre-1994, 1994 and 2006 Power Policy) may be processed according to the signed agreements except the IPPs under the Power Policy 2002 till the conclusion of an investigation by National Accountability Bureau (NAB); and (ii) the matter of the alleged saving in the tariff component of IPPs of 2002 Policy is already under investigation by NAB. National Accountability Bureau may be requested to examine and validate the process of negotiations and signing of agreements, including arbitration submission agreement. NAB may also inform if it has any objection to the signing of these agreements and making of payments to the IPPs of the 2002 Policy.

The sources said, 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 of June 8, 2021. The Cabinet decision required examination and validation of the process already completed by the Power Division; whereas NAB acknowledged that IPPs of the 2002 Policy are under investigation, but declined to examine or validate the process, or to inform if it has any objection to these agreements or to making payments to IPPs under these agreements.

According to sources, in view of the previous decisions by ECC and Federal Cabinet and a response from NAB, the following proposals were submitted for the consideration of ECC: (i) payments, to all IPPs under the Power Policy 2002, which have signed agreements pursuant to the MoUs, may continue to be withheld, till the NAB investigations are concluded; and (ii) the process of signing Arbitration Submission Agreement with IPPs of the 2002 policy and notification of their revised tariffs as determined by Nepra may remain suspended till investigations by NAB are concluded. The sources said that when the summary tabled for a discussion, the ECC decided to defer it due to paucity of time.

A spokesperson for Power Division also confirmed that the summary on IPPs has been deferred but did not share further details.

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