ISLAMABAD: Ministry of Water and Power has started arm twisting Independent Power Producers (IPPs) demanding payment of overdue arrears against the power sector. As a first step, Private Power Infrastructure Board (PPIB), an arm of the Ministry, has sent legal notices to 13 IPPs for giving an advertisement in the newspapers through IPPAC (Independent Power Producers’ Advisory Council) for allegedly violating Implementation Agreements (IAs). Two more legal notices are expected to be issued through Central Power Purchasing Agency (CPPA) for alleged violation of Power Purchase Agreement (PPA) and violation of commitments.

The legal notice issued by the PPIB to 13 IPPs highlights the following: (i) Implementation Agreement of September 18, 2007 was executed by and between the Company and the President of the Islamic Republic of Pakistan for and on behalf of GOP; (ii) pursuant to the terms of the IA, GoP guarantee of November 14, 2007 for payment obligations of the power purchaser under and pursuant to the PPA was issued to the company; (iii) the contractual framework pursuant to the IA and the terms of the guarantee provides a detailed mechanism in relation to rights and obligations of the parties thereto respectively including but not limited to Dispute Resolution, Notices, Confidentiality etc; (iv) the company, in excess to the contractual framework has resorted to extraneous means to malign the GoP and its entities, initially got published in two newspapers on March 5, 2017, an advertisement with the heading “circular debt soaring again” containing ill-founded, baseless, disparaging, maliciously false statements and insinuations through Independent Power Producers Advisory Council (IPPAC); (v) the company, thereafter, purportedly called upon the GoP guarantee without adhering to the terms and conditions of the IA and the guarantee; (vi) despite making such purported call on GoP guarantee which was not admissible and process-able as per the terms thereof hence rejected, the company once again, got published in newspapers on March 6, 2017 and March 8, 2017, advertisements containing therein similar contents as of advertisement o f March 5, 2017, however with an addition of negative campaign as to the countdown of the purported GoP default; (vi) despite rejection of purported call on the guarantee by PPIB through its letter receipt was acknowledged by the company in a meeting held on March 13, 2017 and commitment of the company to resolve all issues/matters under and in accordance with the contractual framework, the company once again got published on March 6, 2017 , advertisements conveying therein postponement of the said purported call on guarantee for another 10 days without having any legal basis and valid claim lodged with the GoP and ; (vii) the advertisements and subsequent advertisements contained intentional and knowingly untrue and incorrect facts and figures, evidencing the presence of improper and wrongful motivation being maliciously and tainted with bad faith.

According to the PPIB, the legal authority of the IPPAC is also called to question to make such a public claim against the GoP and its entities considering that neither the GoP nor any of its agencies or wholly owned companies has entered into any legally binding contract to purchase power or matter incidental thereto from the IPPAC. The re-course of any claim or dispute, notice or disagreement as stipulated in the IA and the guarantee cannot be made by a third party, thus the GoP reserves its rights to proceed against such 1PPAC and its officials in its capacity as its purported representations

The power sector “ facilitator” further stated that ‘libelous’ publication contained in the advertisements has compromised efforts of the GoP to facilitate and boost local as well as foreign investment in the country and publishing of such ‘malicious’ advertisements is construed as serious attempt to distort the factual scenario and propagate a false and misleading perception of panic, unrest and distress within the industry as well as public at large to harm the national interests and tantamount to create civil unrest by alleging the sovereign default.

“The contents of the advertisements have also scandalized sub-judice matters before competent courts unlawfully and illegally against the settled legal norms and to which the courts have exclusive jurisdiction to take cognizance thereof and accordingly appropriate proceedings may be initiated against the company,” PPIB added.

Managing Director PPIB argued that the contents of the advertisements, without having regard to the contractual rights and obligations of the parties, published for circulation to public at large, in extremely uncalled for, baseless, flippant, waggish assertions and threats, is a serious continuous attempt by the company to hamper peaceful resolution of disputes and to jeopardize conducive investment climate and initiatives undertaken by GoP in relation thereto, being against the national interest, is required to be dealt with in accordance with the applicable laws of the land.

IPPs have been directed to denounce the contents of the advertisements and retract the advertisements and subsequent advertisement in the same manner and mode immediately and tender an unconditional written apology within seven days from the date of issuance of this legal notice.

IPPs have also been directed to refrain from any such libel and disparaging statements with immediate effect and any sort of publishing, directly or otherwise, for public at large or any specific interest group or persons either through print or electronic media or through any other mode having circulation to general public or any specific interest group or persons in relation to matters required by the Parties to be resolved under and in accordance with the terms of the IA and the Guarantee or otherwise;

MD PPIB has also threatened that in case of failure on IPPs part to comply with the legal notice and/or any procrastination GoP without prejudice to any other legal rights and remedies under the IA and laws of Pakistan and shall have the right to initiate legal proceedings (civil and criminal) including but not limited to file suit for defamation and/or damages at their risk and costs.

Barrister Asghar Khan, a leading attorney of energy matters, when asked to comment on the situation, argued that there is a need for defusion of confrontation and further aggravation between the Government and IPPs. There should be mediation between the Government and the IPPs in accordance with contractual commitments and rights and obligations of the parties. As an initial step the outstanding amounts should be reconciled and payment of outstanding amounts be negotiated in a structured manner that provides relief to the investors and consumers.

He suggested that Nepra as a regulator should intervene suo motu for resolution of dispute as per its powers and functions under law to avoid any adverse effect on the operation of electric power services and for ensuring continuity of power supplies. On the status of project agreements with IPPs, he was of the view that the project agreements although marked as confidential are public documents and their terms and conditions are open to public scrutiny. He maintained that this information is required to be in public domain for ensuring transparency.—MUSHTAQ GHUMMAN