ECC fixes minimum take or pay commitment at 33% to favour three RLNG power plants  

ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet approved the proposal of the power division on Wednesday to fix the minimum take or pay commitment at 33% to guard the interests of three RLNG public sector power plants.

Minister for Finance and Revenue Ishaq Dar presided over the meeting of the ECC.

Sources said that the ECC vide its decision, dated April 14, 2021, approved a proposal to waive the minimum 66% take or pay commitment in the Power Purchase Agreement (PPA) and Gas Supply Agreement (GSA) of three public sector RLNG power plants — the Quaid e Azam thermal power plant, Baloki power plant and Heveli Bahadur Shah power plant.

Furthermore, instead of an annual production plan for firm gas commitment, the concept of a monthly production plan binding on power purchase and the project companies was introduced with effect from 2022.

Although this decision of the ECC was put in practice, the related amendments in the PPA and GSA could not be put into effect. This also impacted and delayed the privatisation process of the National Power Parks Management Company which owns and operates two of the plants — Baloki and Haveli Bahadur Shah.

The prevailing international economic conditions and the unprecedented price hike of RLNG in the international market has made it expedient that the ECC decision, dated April 14, 2021, be revisited to optimise the utilisation of RLNG for the continued operations of these power projects.

In this regard, a meeting was held on December 20, 2022, at the power division which included all stakeholders: The privatisation commission, petroleum division, power division, PPIB, NPPMCL, SNGPL and CPPA-G. They deliberated on the issues of amendments in the implementation agreement (IA), PPA and GSA.

Participants noted that the main issue is to settle changes stated in the GSA which were then to be reflected in the PPA and IA. 

Sources present said that the power division has highlighted two issues: Amendment in 66% take or pay provision and fixation of gas supply deposit amount.

After detailed deliberations, all the stakeholders agreed that instead of completely diminishing the 66% take or pay commitment it should be fixed at 33% and that the gas supply deposit under the GSA be fixed to Rs 15 billion per power project instead of the existing GSD which is equivalent to one fourth of maximum gas allocation valued at current applicable gas price, inclusive of taxes. It was further agreed that changes made in the GSA shall be reflected in the PPA and IA by relevant parties.

In addition, it also asked ECC to authorise PPIB, CPPA, SNGPL and NPPMCL to make necessary amendments in the respective project documents after completing other formalities.

The ECC considered and approved a summary of Ministry of Industries and Production on the revision of price of imported Urea. It allowed to fix Dealer Transfer Price (DTP) of 50 kg imported Urea bag at Rs 2340/bag by NFML and provisionally approved incidental charges from KPT at Rs 594/bag and from Gwadar at Rs 1008/bag respectively to bring stability in the prices of Urea in the market. 

The ECC further directed that 50% of the subsidy of imported Urea should be shared by the provinces. 

It also considered another summary of the Ministry of Industries and Production on provision of funds to the Heavy Electrical Complex (HEC). This was to release the markup amount to the Bank of Khyber (BoK). After discussion, the ECC approved Technical Supplementary Grant (TSG) amounting to Rs 80.988 million to HEC for payment to Bank of Khyber for markup amount for the second, third and fourth quarters of the calendar year 2022. It also gave approval in principle for provision of funds with direction that the transaction of HEC must be completed by February 15, 2023.

Next, the ministry of railways submitted a summary on its business plan to generate a decent source of earning in order to improve its financial health through laying of fiber optic cable along its infrastructure. The ECC after discussion constituted an inter-ministerial committee comprising federal secretaries of all relevant divisions, headed by the federal minister for law and justice to prepare a draft on Right of Way Policy on the issue.

The committee also approved a Technical Supplementary Grant of Rs 500 million in favour of the ministry of housing and works for the execution of a development scheme on the construction/rehabilitation of flood affected roads, District Muzaffargarh-I.