ECC approves Rs21bn to settle payment dispute with Port Qasim Electric Power Company


ECC

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has given approval for the settlement of a Rs21 billion issue related to capacity payment with Port Qasim Electric Power Company (PQEPCL).

This decision was made in a meeting of the ECC chaied by Caretaker Finance Minister Dr Shamshad Akhtar.

The Ministry of Energy informed the ECC that Independent Power Producers (IPPs) under the China Pakistan Economic Corridor (CPEC) are using imported coal have faced challenges regarding capacity deductions and liquidated damages due to the unavailability of power plants.

These IPPs claim that the government of Pakistan’s failure to provide necessary foreign exchange cover for coal procurement has led to fuel shortages, causing non-availability of plants.

Specifically, PQEPCL faced non-availability for 82 days, resulting in a deduction of Rs21 billion from its capacity payment by the Central Power Purchasing Agency (CPPA-G). The stakeholders recommended negotiating an agreement to immediately stop capacity payment deductions during forex unavailability for coal procurement and to settle the accumulated amount.

An agreement between CPPA-G and PQEPCL was initiated, and CPPA-G and BoDs approved this agreement for settling capacity deductions due to fuel shortage. The Ministry of Energy proposed to the ECC to approve the settlement and allow CPPA-G to negotiate with other CPEC power projects facing similar issues.

As per the agreement, if foreign exchange is unavailable for coal procurement, the power purchase shall not deduct the capacity purchase price or impose liquidating damages for the period of unavailability. During this period, IPPs shall waive their right to claim return on equity and cost of working capital, performing additional days at the end of the Power Purchase Agreement (PPA) term.

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ECC approved the settlement with PQEPCL as proposed by the Power Division. The meeting also discussed inflation trends and directed measures for price stability. EOBI’s budget was approved, appreciating its improved performance. The TAPI project approval under the Foreign Investment (Promotion and Protection) Act, 2022, was discussed, emphasizing the need for its timely launch. Further examinations were suggested for legal aspects, incentives, and concessions. The Cabinet Committee on State-Owned Enterprises approved the public release of a consolidated report for State-Owned Enterprises for FY 2019-2020, 2020-2021 & 2021-2022.

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