ECC directs to sign Power Purchase Agreement with KE
Aftab Ahmed
The Economic Coordination Committee (ECC) has directed Power Division to sign the Power Purchase Agreement (PPA) with K-Electric (KE).
The power purchase agreement will enable the KE to settle the payable disputes and finalize an acquisition deal with a Chinese firm. The ECC has directed to complete actions by May 31, 2021, in this regard.
The Ministry of Privatization briefed the ECC in a recent meeting about the case of granting financial security certificate (NSC) and outstanding issues of KE’s payables and receivables.
It submitted the following proposals for consideration and approval of the ECC.
Ministry of Privatization sought settlement of the past payables and receivables of KE with Government Parties and Draft Arbitration Agreement to settle these dues.KE wants to sign a power purchase agreement in this regard. However, the power division wants to sign an agreement for future deals regarding payables and receivables.
It sought approval to allow secretaries of the Power and the Finance Divisions to sign the Arbitration Agreement on behalf of the President of Pakistan.
Ministry of Privatization further pleaded to allow the Power Division to issue guidelines to NEPRA, under the NEPRA Act 1997, for the addition of cost of funds in the tariff of an electricity distribution company including KE in case the GOP fails to make payment of any agreed subsidiary and additionally.
It further said that Nepra may advise the government to hold an inquiry and fix responsibility for the delay in the payment of subsidy if there was no plausible reason for such delay.
Lastly, the attorney General may submit the draft Arbitration Agreement and future framework before the Supreme Court of Pakistan in pending case of KE and incorporation of directions of Supreme Court, if any, in the proposed scheme.
During the ensuing discussion, Secretary Power Division drew the attention of the forum to the comments of the Power Division and requested that the forum may take into account such comments for consideration.
DECISION
The Economic Coordination Committee (ECC) of the Cabinet considered the summary submitted by the Ministry of Privatization titled ＂Grant of National Security Certificate (NSC) and Outstanding Issues of KE’s Payables and Receivables” and directed as follows:
The ECC encouraged and endorsed the plan of action as a result of successful negotiation with KE by the Minister for Energy, Minister PD&SI, and Power Division.
The ECC directed to sign the Power Purchase Agreement (PPA) for the future. Agreement on payment of tariff differential subsidy (TDS) is signed separately. Consequential actions may be completed by the Power Division by 31st May 2021 to ensure an uninterrupted supply of electricity to Karachi.
（iii)
Regarding the draft Arbitration Agreement to settle the past payables and receivables of the KE under power purchase agreement for past, the ECC constituted a Committee under the Convenorship of Minister for Planning, Development & Special Initiatives and comprising of Minister for Energy, Secretary, Power Division, Secretary, Petroleum Division, Secretary, Finance Division and Secretary, Privatization Division.
Moreover, the committee will renegotiate with KE. However, there will be no new insertion in the already agreement. ECC also asked to leave the matter to the Arbitrator to make final the decision. The privatization division will provide Secretariat support to the Committee.
