Islamabad: Cabinet Committee on Energy deferred the final decision on payment mechanism and agreement with Independent Power Producers (IPPs) till February 8.
A meeting of the Cabinet Committee on Energy (CCoE) was held under the Chairmanship of Federal Minister for Planning, Development and Special Initiatives Asad Umar here in Islamabad on Wednesday.
The Power Division submitted the summary on Payment mechanism and Agreement with Independent Power Producers (IPPs). The Power Division informed the committee that out of 47 memorandums of understanding (MoUs), the implementation committee has agreed the payment mechanism with 44 IPPs.
Secretary Power Division briefed the Committee on the purposed mechanism. According to a source present at the meeting, the government as per MoU agreed to pay Rs 450 billion. However, there is dispute on Rs 53 billion between Power Division and the IPPs and agreement with 8 IPPs of wind power is yet to be signed. Therefore, the government will pay IPPs Rs 350 billion as a first tranche.
As certain members of the Committee sought more time to study the proposals in detail, it was decided that the Committee would be reconvened on Februay 8 for a final decision in the matter. Secretary Power Division said that time is running out for the committee because on February 12, the MoU will expire and then the whole exercise will have to be done from scratch. “The committee must approve the agreement with IPPs on 8th of this month so it should get approval in Cabinet meeting to be held on February 9,” he observed.
The CCoE also considered the report of the sub-committee regarding allocation of pipeline capacity to new LNG Terminals. The CCoE decided that in order to provide fair and level playing field to new LNG terminals, the existing available capacity in pipeline be allocated to any applicant, including CNG, meeting the requisite criteria for three months’ rolling basis until the new Terminals achieve commercial operations date.
The Power Division presented the latest circular debt status and projections. The CCoE was briefed about the situation of circular debt from July 2020 to December 2020. The committee noted that the projected circular debt accumulation is decreasing as a result of the Circular Debt Management Plan being implemented by the government. The Committee appreciated the efforts of the Power Division for regular monitoring of circular debt situation, and directed them to timely issue the monthly data for the committee to review.
The meeting was attended by Minister for Energy Omar Ayub Khan, Federal Minister for Information and Broadcasting Shibli Faraz, Federal Minister for Maritime Affairs Syed Ali Haider Zaidi, Advisor to Prime Minister on Finance Abdul Hafeez Sheikh, Special Assisstant to Prime Minister on Petroleum Nadeem Babar and official of various divisions.
