In two separate notifications submitted to the Pakistan Stock Exchange (PSX) on Tuesday (today), Lalpir Power Limited and Pakgen Power Limited have announced that they initialed a ‘Master Agreement’ and a ‘PPA Amendment Agreement’ with the Central Power Purchasing Agency (CPPA) on 21 January 2020.
The notices indicated that the formal signings of these agreements are to be approved by the Boards of Directors of both companies.
According to the Master Agreement, the Government of Pakistan intends to create a competitive power market. It also includes the term that the CCPA will assist and support the related companies in their tax issues with the Federal Board of Revenue (FBR) for speedy resolutions of all their ongoing cases, including the apportionment of input tax and the minimum tax on capacity purchase price invoice, and the taxability of late payment charges.
On the other hand, the PPA Amendment Agreement entails that the US Dollar exchange rate and US CPI indexations will be applied on reduced variable O&M and on 50 percent of the reduced escalable component of the capacity purchase price.
Furthermore, the USD exchange rate on 50 percent of the reduced escalable component of the capacity purchase price will not be less than the National Bank of Pakistan’s (NBP) TT/OD selling PKR/USD exchange rate prevailing on the date of the signing of this amendment. It will also not exceed the exchange rate of PKR 168.6/USD 1.
The notification further highlighted that the agreement also stated that the total outstanding amount as of 30 November 2020 will be paid within a year.