ISLAMABAD: National Accountability Bureau's (NAB’s) investigation against Independent Power Producers (IPPs) has reportedly put first installment of 40 per cent of agreed amount of over Rs 400 billion in limbo, well-informed sources old Business Recorder.
Earlier, the IPPs, established under the pre-1994 Power Policy and 1994 Power Policy were expecting installment of 40 per cent agreed amount before the end of current month.
"Power Division has written a letter to NAB, requesting anti-graft body to go through all the agreements and other available documents and issue a clean chit before the payment to the IPPs to avoid any investigation in future," the sources added.
The current development has sent negative signals to the IPPs, especially those established under the pre-1994 Generation Policy and the 1994 Generation Policy.
"The last day for making payment is March 29, 2021. GoP had pledged to pay within 30 business days from February 11, 2021 when the agreements were signed. If the government defaults in making payment, agreements for all the concessions will be null and void obviously," said one of the representatives.
NAB has asked for provision of record and present status of MoU/agreements signed and final negotiations between IPPs and GoP under section 19 of the National Accountability Ordinance 1999.
According to sources, Power Division believes that any step taken in haste, can create troubles for the concerned officials in future that is why all possible legal procedures are being fulfilled.
Earlier, Power Division had submitted a summary to the Economic Coordination Committee (ECC) suggesting it to stop payments to the IPPs established under Generation Policy 2002 until National Accountability Bureau investigation against them is completed.
According to the contracts, the Federal Government pledged to pay 40 per cent - Rs 400 billion to the IPPs no later than 30 working days starting from February 11, 2021. After excluding, holidays.
"We are expecting that NAB will send its opinion on the letter written by the Power Division after which the decision to make payments will be taken," the sources continued.
The IPPs established under the pre-1994 Policy and the 1994 Policy also approached the government to at least clear their payments instead of waiting for the last day of the agreed date.
IPPs which signed agreements with the government against payments of agreed amount of Rs 400 billion, are uncertain as to the government’s intent and ask what message is being sent to the international investors.
IPPs established under the Generation Policy 2002 are of the view that if the agreed 40 per cent amount is not paid, they will not be able to ensure fuel stocks.
Nepra has also not approved amendments in the PPAs as per the agreements which is also one of the reasons for not processing their cases.
However, IPPs established under the 2002 Policy argue that if the government has issues in making payments as per the revised agreements, then it should release regular payment so that they can maintain their stocks.
Another IPP representative stated that "If the government backs out from its commitment despite signing of revised agreements, it will send a negative signal to the foreign investors at a time when FDI is already on the decline."
According to him, NAB was taken into confidence on the revised agreements and even its representative sat in the ECC meeting when approval of agreements was granted.
Power Division, in its summary had sought approval of the ECC to withhold payments to IPPs established under the Generation Policy 2002 until a clear chit is received from the anti-graft body.
As per the payment mechanism included in the agreements, the first instalment of outstanding payables of IPPs is to be paid within 30 days of signing of the agreement with the IPPs under pre-Nepra regime and after tariff determination for IPPs under Nepra regime. Tariff adjustment application for the IPPs under Nepra regime is to be filed within five days of signing the agreements.
According to sources, the issue of excess profitability of 2002 Power Policy IPPs has been highlighted through the report of the committee of power sector audit, circular debt resolution, and future roadmap. Subsequently, Committee for Negotiations with Independent Power Producers notified on June 3, 2020, signed MoUs with the IPPs containing the following clause: "In order to assess if IPPs have made any excess profits, the reconciled numbers between the Committee and the IPPs shall be submitted to Nepra. As a legal body vested with the authority for tariffs, Nepra shall hear and decide this matter in accordance with the 2002 Power policy, tariff determinations and PPAs and provide for a mechanism for recoveries, where applicable."
The Implementation Committee recommended signing of an Arbitration Submission Agreement with the IPPs. The draft Arbitration Submission Agreement has been agreed and initialed between GoP and 12 IPPs under the Power Policy 2002.
The sources further stated that NAB has stated that the Bureau is conducting investigation on the allegations of corruption and corrupt practices against owners/management of the Power Policy 2002 IPPs, officers/officials of Nepra and officers/officials of CPPA-G and others.
Power Division argues that since NAB is conducting investigations into the issue of excess profitability and this matter relates to IPPs of the Power Policy 2002, it would be appropriate to wait for the conclusion of NAB investigations before proceeding further with payments to these IPPs.
NAB maintains that the matter has been converted by NAB from an Inquiry in 2019 to Investigation in 2021.
“We have also decided that the process of signing Arbitration Submission Agreements with IPPs under 2002 Power Policy may be held in abeyance till the conclusion of NAB investigation,” the Power Division further noted.
Power Division maintains that since NAB has been provided record of all 47 IPPs to let it complete its investigation.