ThalNova Power Thar (Pvt) Limited (TNPTL) and Thar Energy Limited (TEL) were issued Letters of Support (LoS) on December 8, 2016 and December 9, 2016 for the development of 330 MW Thar coal based independent power generation project each at Thar Block-II, Sindh.
The sources said both projects are being processed under the CPEC and required to achieve Commercial Operation Date (COD) by December 31, 2020. Accordingly, Implementation Agreements (IAs) with TNPTL and TEL have also been executed on November 24, 2019 and November 19, 2017 respectively. Meanwhile, Cabinet Committee on Energy (CCoE) in its meeting held on February 1, 2018 directed the Power Division that completion of ongoing projects in the south should be ensured within their timelines for the availability of requisite power to be evacuated through HVDC transmission line project and extended the COD of HVDC transmission line project from November, 2020 to March, 2021. CCoE also directed PPIB to ensure that the projects are also required to share the cost of capacity payments (for HVDC transmission line project) in case capacity payment is accrued due to delayed COD of the projects by incorporating it in all future IAs/ PPAs.
The decision of the CCoE was communicated to TNTPL & TEL. Both of them were reluctant to accept additional Liquidated Damages (LDs) of TSC on the pretext that their PPAs have already been signed and shared with lenders. After due pursuance both companies agreed to accept the conditions to be incorporated as amendments in the respective PPAs with the condition that section 14.1(a) (ii) of the respective IAs and section 16.1(a)(ii) of the PPAs related to TNPTL & TEL will be amended whereby failure of the project companies to achieve the COD within 400 days following the required COD (after which the GoP is entitled to terminate the IAs and exercise the option to take over the project) will be increased to 490 days.
PPIB considered the counter proposal and approved it. Accordingly, the proposed amendments to respective IAs were considered by the Board of PPIB in its 124th meeting held on July 15, 2019, while approving the drafts of proposed amendments to the IAs for execution by the MD PPIB with TNPTL and TEL respectively; the Board of PPIB also directed that the matter be placed before the ECC for its approval.
The sources further stated that by way of proposed amendments to the respective IAs GoP's right to terminate the project in case of delays or defaults by the project company has been delayed by 90 days, however, it would not add any additional financial obligation on the part of GoP.
The amendments have been agreed on quid pro quo basis where TNTPL and TEL have agreed to pick up the LDs proportionate to transmission service charges payable by NTDC to Pak-Matiari Lahore Transmission Company (Pvt) Limited under the Transmission Services Agreement. TNTPL and TEL have been made to pick up LDs under the respective PPAs in addition to the LDs approved by ECC in standard documents under the Power General Policy, 2015 and after they had already signed the PPAs. Furthermore, the proposed amendments will not absolve TNTPL and TEL to achieve their respective CODs and in case of delay both TNTPL and TEL shall continue to be liable to pay the LDs under the respective PPAs.
The sources said Power Division has recommended to the ECC to approve increase in the time period for exercise of GoP's right to terminate two projects from 400 days to 490 days for which amendments in respective agreements have been proposed.
