The National Electric Power Regulatory Authority (NEPRA) has imposed a Rs. 100 Million Fine on the Central Power Purchasing Agency-Guarantee (CPPA-G).
The penalty relates to CPPA-G’s failure to impose liquidated damages on WAPDA. NEPRA said the agency did not enforce the applicable provisions.
According to the regulator’s order, CPPA-G was required to apply liquidated damages against WAPDA. The failure to enforce these provisions resulted in regulatory action.
NEPRA has ordered CPPA-G to deposit the Rs. 100 Million Fine in the designated bank. The agency has been given 15 days to make the payment.
The deadline will start from the date CPPA-G receives the regulatory order. NEPRA has also forwarded the order to CPPA-G’s chief executive officer.
NEPRA Chairman Raises Financial Concerns
The NEPRA chairman recorded a dissenting note on the matter. He highlighted the potential financial consequences of enforcing liquidated damages at this stage.
According to the dissenting note, WAPDA’s potential claims for late payment interest stand at around Rs. 175 billion.
Meanwhile, CPPA-G’s liquidated damages claims are estimated at approximately Rs. 77 billion. The figures show a significant difference between the two potential financial claims.
The chairman noted that enforcing liquidated damages could lead to larger late payment interest claims from WAPDA.
He further warned that the resulting financial burden could eventually increase circular debt. According to his note, this outcome would not be in the interest of Pakistan’s power sector.
The dissenting note therefore focused on the broader financial impact of the decision.
CPPA-G’s Role in the Power Sector
CPPA-G serves as the government’s central power purchasing and market settlement agency. It purchases electricity on behalf of distribution companies.
The agency also manages billing, payments, and financial settlements with power producers. Its responsibilities cover important commercial aspects of electricity procurement.
Under the existing framework, CPPA-G handles commercial matters related to power purchase arrangements involving WAPDA’s hydropower generation.
The dispute relates to the enforcement of financial provisions within these arrangements. NEPRA’s order has now imposed a Rs. 100 Million Fine on CPPA-G.
Payment Deadline Set by NEPRA
CPPA-G must deposit the penalty within 15 days after receiving the order. The payment must be made through the designated bank specified by the regulator.
The case has also highlighted concerns about potential financial obligations involving WAPDA and CPPA-G.
The NEPRA chairman’s dissent points to possible effects on the country’s circular debt. It also highlights the financial consequences that could arise from enforcing the liquidated damages.
In other related news also read NEPRA Approves Fixed Fees for Domestic Power Consumers
For now, CPPA-G is required to comply with NEPRA’s order within the specified timeframe. The Rs. 100 Million Fine remains the key regulatory penalty imposed in the case.
