The federal government is likely to abandon its contract with four rental power producers (RPPs), including Walter Power International, Ruba Energy Pakistan, Techno e-Power and Pakistan Power Resource LLC, as none of them witnessed any significant progress, Pakistan Today learnt on Saturday. However, a final decision will be made in the cabinet meeting on October 12.
Official documents made available with Pakistan Today indicate that the Pakistan Electric Power Company (PEPCO) had suggested that an advanced payment of seven percent (Rs 1.493 billion) should be released to two RPPs − Kamoki Energy and Sialkot Rental Power – as they had witnessed substantial progress and commitment to achieve targeted commercial operation date (COD) within 120 days of advance payment.
Documents revealed that Kamoki Energy Limited (KEL) had already served three legal notices for the release of seven percent down payment, in which KEL warned of initiating legal proceeding in the Supreme Court of Pakistan (SC) for recovery of heavy consequential losses in case the government failed to release the down payment amount. Official estimates indicate that for the implementation of these two RPPs, an amount of Rs 4.34 billion is required, of which Rs 1.493 billion is needed for the release of seven percent down payment and Rs 2.850 billion for establishing their fuel purchase letter of credit (two months fuel payment at guaranteed availability).
Documents also showed that the National Electric Power Regulatory Authority (NEPRA) had warned that the induction of the two RPPs would result in additional burden on consumers, hence the available independent power producers’ (IPPs) unused capacity should be utilised. The Ministry of Finance has also endorsed both proposals and supported provision of guarantee of 93 percent of the rental amount.
It suggested PEPCO and power generation companies (GENCOs) make arrangement for the payment of seven percent advance payments on their own. The official summary stated that the power supply and demand gap of 2,000MW-3,000 MW in the year 2009 had now stretched to 4,500MW-5,000MW due to a shortage of natural gas, sabotage of gas pipelines and non-availability of any spinning reserves in the system. It said the system did not have any spare capacity to fill the gap created by forced outages.
