New and improved?: Govt to revive RPPs to ‘avoid $2b in damages’
NEPRA, water and power ministry disagree on seeking Supreme Court approval on revival.
A file photo of a Turkish rental power plant.
ISLAMABAD:
The government’s plan to revive a few rental power plants (RPPs) under a new name appears to be an effort to seek a waiver of damage claims by settling a case with Turkish Karkey Karadenzin Electricity Production Corporation, which has filed a lawsuit with World Bank’s International Centre for Settlement of Investment Disputes (ICSID).
The company claims $2.1 billion in damages from the government of Pakistan.
According to officials, the government said the ‘new’ plants would be eligible under the short-term IPP framework, which offers unconditional and irrecoverable waivers of arbitration against the government of Pakistan and its entities.
The author of the policy is Water and Power Minister Khawaja Asif who filed a case against the RPPs in the Supreme Court (SC), alleging corruption. But he now has the Economic Coordination Committee’s (ECC) approval to revive some RPPs, many under a different name.
Officials said that despite claims of curtailing load shedding this summer, the government would not be able to fulfil its promise as power shortfall has exceeded 2,700 MW, which could touch 4,000 MW.
In an ECC meeting on March 27, the participants were informed that to avoid obsolescence of such plants, machinery and monetary claims under arbitration, the Pakistan government intended to bring forth a transparent policy for the utilisation of the existing plants and machinery as an immediate measure to reduce the gap between demand and supply. This arrangement would generate an additional 200MW of electricity.
During the meeting, the Ministry of Finance and Planning Commission supported the policy, provided that it does not contravene the Supreme Court’s March 3, 2012 order. The Law and Justice Division supported the proposal.
The National Electric Power Regulatory Authority (Nepra) commented that for any proposed arrangement, approval and permission from the apex court would be a pre-requisite. However, even if any such approval was given, Nepra would have to consider the viability of the proposed arrangements, keeping in view certain factors, including, but not limited, to the availability of fuel, efficiency of the plants and the interests of end consumers.
A special purpose company would be incorporated under the laws of Pakistan and it shall obtain a generation licence and tariff determination from Nepra. The meeting was also informed that terms and conditions of the tariff would be determined by the regulator based on a take-and-pay basis when electricity is finally added to the national grid.
A power ministry official said this policy may not be feasible as the government would not give any guarantee. The ministry would not seek the Supreme Court’s consent while also striking deals with power plants, he added.
Published in The Express Tribune, April 6th, 2014.
The government’s plan to revive a few rental power plants (RPPs) under a new name appears to be an effort to seek a waiver of damage claims by settling a case with Turkish Karkey Karadenzin Electricity Production Corporation, which has filed a lawsuit with World Bank’s International Centre for Settlement of Investment Disputes (ICSID).
The company claims $2.1 billion in damages from the government of Pakistan.
According to officials, the government said the ‘new’ plants would be eligible under the short-term IPP framework, which offers unconditional and irrecoverable waivers of arbitration against the government of Pakistan and its entities.
The author of the policy is Water and Power Minister Khawaja Asif who filed a case against the RPPs in the Supreme Court (SC), alleging corruption. But he now has the Economic Coordination Committee’s (ECC) approval to revive some RPPs, many under a different name.
Officials said that despite claims of curtailing load shedding this summer, the government would not be able to fulfil its promise as power shortfall has exceeded 2,700 MW, which could touch 4,000 MW.
In an ECC meeting on March 27, the participants were informed that to avoid obsolescence of such plants, machinery and monetary claims under arbitration, the Pakistan government intended to bring forth a transparent policy for the utilisation of the existing plants and machinery as an immediate measure to reduce the gap between demand and supply. This arrangement would generate an additional 200MW of electricity.
During the meeting, the Ministry of Finance and Planning Commission supported the policy, provided that it does not contravene the Supreme Court’s March 3, 2012 order. The Law and Justice Division supported the proposal.
The National Electric Power Regulatory Authority (Nepra) commented that for any proposed arrangement, approval and permission from the apex court would be a pre-requisite. However, even if any such approval was given, Nepra would have to consider the viability of the proposed arrangements, keeping in view certain factors, including, but not limited, to the availability of fuel, efficiency of the plants and the interests of end consumers.
A special purpose company would be incorporated under the laws of Pakistan and it shall obtain a generation licence and tariff determination from Nepra. The meeting was also informed that terms and conditions of the tariff would be determined by the regulator based on a take-and-pay basis when electricity is finally added to the national grid.
A power ministry official said this policy may not be feasible as the government would not give any guarantee. The ministry would not seek the Supreme Court’s consent while also striking deals with power plants, he added.
Published in The Express Tribune, April 6th, 2014.