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Govt pays Rs89.2 billion to IPPs as first installment

Govt pays Rs 89.2 billon to IPPs Pakistan

ISLAMABAD: The federal government on Friday paid Rs 89.2 billion as the first instalment of payments to twenty Independent Power Producers (IPPs).

Special Assistant to Prime Minister on Power and Petroleum, Tabish Gauhar in a social media post said “I am pleased to inform that the first payment transaction, approved by the Government of 40% to 20 IPPs amounting to Rs 89.2 bln have been completed in coordination with SBP and Power Division. This shows our commitment to resolve this longstanding issue on a permanent basis,” he added.

All stakeholders must urgently up our onshore & offshore E&P game for national energy security, he urged. He said transferring upstream regulatory functions from Petroleum Division to an independent Authority (summary approved by cabinet legal committee this week).

“Conducting more frequent biddings, encouraging out-of-court settlement on litigations, etc” Gauhar added.

Earlier, the government has assured Independent Power Producers (IPPs) in Pakistan to release payment by Friday. On March 29, 2021, the government missed the deadline to pay 40% dues to lead IPPs in Pakistan.

The government, however, had 70 days since March 29, 2021, to cure the default. Cure Period’ for payment to IPPs is due to end on Monday, June 07, 2021; hence payment to IPPs has to be made by that date or earlier.

On May 05, 2021, the ECC of the Cabinet approved a summary of Power Division seeking approval of Rs89.86 billion for payment of 40% dues as the first installment to 20 plants as 1/3rd cash, 1/3rd 5-Year Sukuk, and 1/3rd 10-Year PIBs.

The remaining 60% payment will be paid in six months in the ratio, 1/3rd cash, 1/3rd 10-Year Sukuk and 1/3rd 10-Year PIBs; This decision was subject to ratification by the Cabinet, which approved the same on May 18, 2021;  The implementation of the IPPs’ amended contracts will be effective after the payment.

In the first phase, the Power Division asked the ECC for a supplementary grant of Rs89.86 billion to pay 40% amount to two IPPs set up under pre-1994 Power Policy, six IPPs under 1994 Power Policy, and 12 IPPs under 2006 RE of the government of Pakistan.