Imran-led govt waives liquidity damages on Rousch Power

Cabinet Committee on Energy discusses proposal pertaining to damages

ISLAMABAD: The government on Wednesday waived liquidity damages worth Rs1.6 billion imposed on Rousch Power (Pakistan) Limited.

Under a settlement plan approved by the Cabinet Committee on Energy (CCOE), it was decided that the power purchaser would not be entitled to impose liquidity damages on the power producer.

The meeting, chaired by Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh, discussed a proposal submitted by the Power Division and approved the settlement of liquidity damages with Rousch Power.

The cabinet body agreed on the principle that the period during which the power plant remained suspended due to unavailability of fuel would be declared as “other force majeure event” (OFME) and terms of the power purchase agreement (PPA) would be extended correspondingly to the OFME period.

The capacity payments made during the period should be recovered through adjustment against late payment interest invoices of the company along with the late payment interest at the rate of 50% of the total interest. This would be worked out up to the date of settlement agreement.

Also, the period during which independent power producers (IPPs) were unable to make available their production capacity and net electric output on account of non-supply of gas, should be treated as OFME under the PPA.

Accordingly, the company would not be entitled to capacity payments during such period and the power purchaser would not be entitled to impose liquidity damages on the company.

Discussing a summary submitted by the Ministry of Water Resources, the CCOE approved a report of the ministry for mitigating the adverse impact on river water quality because of less flows and reduction in water supply to Muzaffarabad due to the Neelum-Jhelum hydroelectric power project.

The CCOE also approved amendments to decisions of the cabinet meeting held on February 27, 2019.

Published in The Express Tribune, August 29^th, 2019.

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