ISLAMABAD, June 27: The Economic Coordination Committee (ECC) of the cabinet approved on Thursday payment of Rs326 billion to independent power producers (IPPs), a Rs24bn restructuring plan for the Nandipur project and a Rs2bn Ramazan Relief Package and also decided to terminate bidding for import of 800mmcfd of liquefied natural gas (LNG). A meeting presided over by Finance Minister Ishaq Dar decided to make the payment to IPPs to clear a major part of the Rs506bn circular debt with four major conditions for which a fresh memorandum of understanding (MoU) will be signed on Friday morning, followed by immediate disbursements, finance ministry spokesman Rana Assad Amin told DNA.
In return, the IPPs will commit in writing in the MoU to achieve their maximum generation capacity and provide 1,700MW to the national grid before Ramazan.
The Hubco, Lalpir, Pakgen and Saba plants, having almost 1,800 megawatts capacity, will make a commitment to convert to coal-based power generation within 16 months.
All IPPs have also agreed to reduce their interest rate on receivables by two percentage points from the existing Kibor (Karachi Inter-Bank Offer Rate) plus four per cent and increase their credit period from 45 to 60 days to ease the payment pressure on distribution companies.
Since the two relaxations would require amendments to the existing power purchase agreements, the IPPs would initially sign an MoU, Mr Rana said. Subsequently, the National Electric Power Regulatory Authority and Private Power and Infrastructure Board would approve an addendum to the agreements, he said.
He said the IPPs and the government had agreed to resolve through arbitration their dispute over Rs23bn outstanding amounts currently pending before the Supreme Court.
USF: The ECC decided to put into the federal consolidated fund over Rs17bn collected through the Universal Support Fund (USF) of the information technology ministry. It held that the ministry had been keeping these funds with itself illegally.
A committee comprising Federal Minister Zahid Hamid, Minister of State Anusha Rehman and the secretaries for law and finance will formulate rules within three days for the utilisation of the USF.
LNG: The ECC terminated two rounds of bidding for two projects of import of 400 million cubic feet daily of LNG each in the light of the Supreme Court’s observations on the matter, Mr Rana said.
The petroleum ministry had come up with three fresh options, including a deal at the government level with Qatar for LNG import, but the committee said a firm proposal with a preferred option should be presented for approval next week after consultation with all stakeholders.
NANDIPUR: To resolve longstanding issue of non-implementation of the 425MW Nandipur Power Project, the ECC decided to issue a fresh letter of comfort to assure the Chinese contractor of the government’s commitment to go ahead with the plan so that it could re-mobilise its equipment.
The ministry of water and power was asked to prepare a fresh PC-I for the project and submit it to the Executive Committee of the National Economic Council (Ecnec) as early as possible.
A request for waiver of Rs1bn demurrage charges on machinery lying at Karachi port was rejected because of a possible revenue loss and Mr Dar said it should be included in the project cost.
The ECC decided to provide a Rs23bn guarantee for the project. A special purpose vehicle (SPV) will be created — funded by Rs16bn through government equity and the remaining amount in banking sector contribution. This will also be part of the summary to be sent to Ecnec for approval.
According to the spokesman, the finance minister said a parallel exercise should be launched to convert the Nandipur project to coal-based generation within 22 months so that the SPV could be ultimately taken up for privatisation.
RAMAZAN: The ECC approved purchase of 100,000 tonnes of sugar by the Trading Corporation from the industry.
Mr Rana said the Rs2bn Ramazan Package would ensure Rs3-5 per kg reduction in the prices of major eatable items like wheat flour, ghee, edible oil, sugar, dal channa, tea, milk and essential spices through the Utility Stores Corporation (USC).
The USC demanded Rs10 million for a advertisement campaign for the package but it was rejected by the ECC, he said.