Karachi August 8 2024: In a notice to the stock exchange, Kot Addu Power Company addressed recent news suggesting that their power plant has been receiving payments without generating electricity.
Regarding the expiration of the Power Purchase Agreement (PPA), the company explained: “The Company entered into a suite of agreements, including the Power Purchase Agreement (PPA), in June 1996 during its privatization by the Privatization Commission, Government of Pakistan. The term of the PPA was twenty-five years, set to expire in June 2021. Pursuant to the terms of the Third Amendment to the PPA and Master Agreement, the pending dispute of liquidated damages with the Power Purchaser was settled, extending the PPA term by 485 days (approximately 16 months) until October 24, 2022. During this extended period, the Company did not charge any capacity payments but was obliged to keep its power plant available to the Power Purchaser for generation.”
The company further explained that their tariff application is awaiting final determination by NEPRA: “Since the expiry of the PPA on October 24, 2022, due to the absence of an operating regime, the Company’s power plant is in preservation mode. The Company’s tariff application is pending final determination before the National Electric Power Regulatory Authority (NEPRA).”
Elaborating on the unique features of the company, they explained; “The Company has the unique feature of a 220KV~132KV switchyard, provided to the Power Purchaser on special request from the Ministry without any compensation since the expiry of the PPA, in the best interest of the MEPCO Region consumers and the smooth functioning of overall National Grid operations.”
The company emphasized that no capacity payments have been made to them since the PPA expired: “It is further clarified that no capacity payments have been paid to the Company by the Power Purchaser since the expiry of the PPA on October 24, 2022.”
They also clarified that they have only received overdue receivables: “The Company, however, received payments of overdue receivables from the Power Purchaser (relating to the period up to the end of the PPA on October 24, 2022), and these have been properly reported in the financial statements of the company.”
