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9 IPPs seek international arbitration for Rs11bn

Updated November 28, 2015

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LAHORE: Nine private power producers have invoked their right to international arbitration for recovering their unpaid capacity payments of Rs11 billion they claim the National Transmission and Despatch Company (NTDC) owes them since 2012.

The nine independent power producers have referred the matter to the international arbitration in London under their Power Purchase Agreement (PPA) with the power purchaser, NTDC, after the latter failed to implement the decision of a mutually agreed expert for the resolution of the dispute and the guarantor, the federal government, went to a civil court to get the expert decision annulled.

The dispute had cropped up when the present government paid off the unpaid bills worth Rs329bn of private power producers in June 2013, in less than one month after returning to power.

The billed amount was however Rs340bn but the government stopped capacity payments of the nine IPPs set up under the Power Policy of 2002, pending a decision by an expert under the PPA.

The capacity payments, according to the chief executive officer of an IPP, pertain to the period in 2012 when the plants were available for generation but couldn’t because of shortage of funds for purchase of fuel on account of delayed payments of their dues by the NTDC.

The affected IPPs include Hub Power (Narowal), Sapphire, Halmore, Liberty Power Tech Limited, Atlas Power, Nishat Chunian, Nishat Power, Orient Power and Saif Power.

The expert, former judge Sair Ali, had declared that the disputed amount was payable to the IPPs and ordered the NTDC to make this payment.

According to the power purchase agreement, both the parties could either ask the expert for review of the order or challenge the verdict within 75 days at higher forum that in this case were the respective international arbitrators in London.

The IPPs claim in case of failure to challenge the verdict the NTDC was bound to make the payment after expiry of 75 days which elapsed on Oct 29, 2015.

The IPPs have asked the international arbitrators to order the NTDC to make the payment determined by the Pakistani expert. All the nine IPPs have filed for international arbitration independently. In case of a favourable decision, the IPPs will be entitled to invoke sovereign guarantees given by the government of Pakistan.

Published in Dawn, November 28th, 2015