Narowal Energy Limited (a wholly-owned subsidiary of The Hub Power Company Limited under the 2002 Power Policy) and the Committee for Negotiations with Independent Power Producers- constituted by the Federal Government have signed a Memorandum of Understanding (MoU).
HUBCO through a notification to the PSX informed that under the terms of the MoU the Return on Equity (RoE) & Return on Equity during Construction (ROEDC) rate shall be changed from current 15% in US$ to 17% in PKR with no future US$ indexation.
The US$ equity shall be converted to PKR using an exchange rate PKR/US$ of 148. The Late Payment Surcharge (LPS) will be lowered to KIBOR + 2.0% for the first sixty (60) days and then shall revert to KIBOR + 4.5% as per the Power Purchase Agreements (PPA), while ensuring that payments follow the PPA mandated FIFO payment principles for this rate to be effective, read the stock filing.
The parties have agreed that as and when the competitive trading arrangement is implemented and becomes fully operational, the power plant shall move to take and pay as per the terms defined in the generation license.
They have agreed that the payment of the receivables of the IPPs is an integral part of the MoU. The Power Purchaser and the Federal Government will devise a mechanism for repayment of the outstanding receivables with agreement on payment of receivables within an agreed time period, which will be reflected in the final agreement to be signed.
The stock filing further said that the terms of the MoU are subject to the approval of the Board of Directors of Narowal Energy Limited and Hubco, as well as NEPRA and the Federal Cabinet and execution of a final agreement between the parties.
It is pertinent to mention that the MoUs being finalized and pertaining to the Power Plants operating under the 1994 Power Policy do not apply to Hubco as the Company has incorporated prior to the 1994 Policy and is a stand-alone negotiated deal.
While negotiations are underway between the committee and the company in relation to the Hub Power Plant, any understanding will be disclosed as and when an agreement has been reached, it added.