Agreements with IPPs will save the government Rs 836 billion. Final approval of payments to IPPs will be sought from the Federal cabinet; Finance Minister Abdul Hafeez Sheikh.
The meeting of the Economic Coordination Committee chaired by Finance Minister Dr. Abdul Hafeez Sheikh was held in Islamabad in which the Ministry of Energy presented a report on the agreements made with private power plants. In the meeting, matters related to IPPs and the Federal Board of Revenue FBR were reviewed. The Implementation Committee also proposed a procedure for payment of dues to 46 IPPs up to November 30, 2020.
In ECC meeting, Minister of Planning, Development and Special Initiatives, Asad Umar, Energy Minister Omar Ayub Khan, Adviser to PM on Institutional Reforms and Austerity Dr Ishrat Hussain, SAPM on Revenue Dr Waqar Masood, SAPM on Power Tabish Gauhar, State Bank Governor Reza Baqir and FBR chairman were present.
Agreements with IPPs will save the government Rs 836 billion.
ECC approves payment of Rs 403 billion to IPPs. Payment will be paid in two installments. In the first phase, Rs 161 billion will be paid. The second installment will be paid six months later. Payments to IPPs will be approved by the Cabinet.
The payment mechanism purpose, a payment of Rs.403 billion would be made to the 46 IPPs in two (2) installments; first will be forty 40 percent of said payables which is Rs 161 billion — to be paid one third in cash, one third in Sukuk and one third in PIB Bonds at a floating rate of T-Bills + 70 bps, while the remaining 60 percent amount i.e, Rs.245 billion would be paid within six months of the first installment, after the final approval of Federal Cabinet.
The ECC appreciated the efforts of the Implementation Committee and paid tribute to the Minister for Energy, Planning, Power, and Chairman Federal Land Commission. The ECC directed that the report of the Implementation Committee be submitted to the Federal Cabinet. The national exchequer will save Rs 836 billion in the coming years due to this agreement.
Similarly, ECC has also approved a supplementary grant of Rs. 35.50 crore to FBR. The FBR will pay this amount for the installation of video cameras in sugar mills.
The government and IPPs agreed to reduce the tariff under this agreement. The agreement will be signed soon after formal approval by the Federal Cabinet. According to sources, government officials and IPPs will formally sign the agreement after approval from the Federal Cabinet. According to the agreement, each IPP board will approve the agreement. The agreement will reduce tariffs and circular debits in the coming years.
