Sources from Private Power and Infrastructure Board (PPIB) told that three Independent Power Producers (IPPs) have given notice to the Government of Pakistan for failing to pay Rs 15.2 billion on the due date of invoices under respective Power Purchase Agreements (PPAs).
According to PPIB, pursuant to Section 1.5.1 of the respective Guarantees of April 30, 2008, and January 3, 2008 read with Section 16.9 of the respective PPAs, Engro Powergen Qadirpur Ltd (EPQL) Nishat Chunian Power Ltd (NCPL) and Nishat Power Ltd (NPL) have served separate notices to PPIB on behalf of the Government of Pakistan stating that the power purchaser (CPPA-G) has purportedly failed to make payment of Rs 9.791 billion to EPQL, Rs 2.760 billion to NCPL and Rs2.687 billion to NPL (in total Rs15.238 billion approximately) under the respective PPAs.
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According to the terms of the Guarantee, following a 30-day period from the date of such notices, the three IPPs may request that GoP pay due and payable amounts. In such a case, GoP is obligated to make payments within 10 days.
According to Director General Dr Munwar Iqbal, because the alleged payment default under the respective PPAs may have serious consequences for the CPPA-G in addition to having an adverse effect on the GoP’s guarantee obligation, the Ministry of Energy (Power Division) has been requested to participate for the soonest release of the due and payable amounts to the three IPPs under the respective PPAs.
If payment is not paid within 30 days of receiving this notification, a Power Purchaser Event of Default in accordance with Section 16.2(b) (Power Purchase Events of Default) of the PPA shall occur, thereby entitling the company to proceed in the manner stipulated by the provisions of the PPA, including Article XVI (Termination).
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This is without prejudice to and does not restrict the corporation from exercising other remedies permitted under the PPA, IA, or by law.
Section 9.6 (payment) of the PPA stipulates that the power purchaser must pay the company the undisputed amount shown on an invoice delivered in accordance with section 9.5 (billing) of the PPA on or before 30 days, following the day the invoice is received by the power purchaser.
However, the power purchaser failed to make payments on invoices totaling Rs2.687 billion by the due date. As a result, the power purchaser’s payment default has happened and is continuing.
In light of the aforesaid, the firm has asked that the power purchaser pay the company the overdue and unpaid amount of Rs 2.687 billion, plus interest at the delayed payment rate specified in the PPA. In case, the payment is not made within 35 days following the notice, a Power Purchaser Event of Default in terms of section 16.2(b) (power purchaser events of default) of the PPA shall occur, thereby entitling the company to proceed in the manner stipulated by the provisions of the PPA including Article XVI (termination).