Key Takeaways
- NEPRA fined the Central Power Purchasing Agency (CPPA) Rs. 100 million for failing to enforce liquidated damages against WAPDA.
- The NEPRA chairman noted that WAPDA’s potential late payment interest claims are estimated at Rs. 175 billion.
- CPPA-G acts as the government’s central power purchasing and market settlement agency, handling commercial aspects of power purchase arrangements.
The National Electric Power Regulatory Authority (NEPRA) has imposed a Rs. 100 million fine on the Central Power Purchasing Agency (CPPA-G) for failing to impose liquidated damages on WAPDA, according to a statement from NEPRA.
According to NEPRA’s order, CPPA-G did not enforce applicable provisions requiring liquidated damages against WAPDA, leading to the fine. The directive was issued to CPPA-G to deposit the fine in the designated bank within 15 days.
The NEPRA chairman recorded a dissenting note, highlighting that WAPDA’s potential claims for late payment interest are estimated at around Rs. 175 billion, compared to approximately Rs. 77 billion in liquidated damages claims by CPPA-G.
He further observed that enforcing liquidated damages at this stage could trigger significantly larger late payment interest claims by WAPDA, potentially adding to the circular debt burden in the power sector.
CPPA-G, which acts as the government’s central power purchasing and market settlement agency, is responsible for procuring electricity on behalf of distribution companies and handling billing, payments, and settlements with power producers.
Under the current framework, CPPA-G handles the commercial aspects of power purchase arrangements involving WAPDA’s hydropower generation, ensuring that all financial transactions are conducted smoothly.
The NEPRA chairman’s dissenting note underscores the complex financial implications of enforcing liquidated damages, emphasizing the need for careful consideration to avoid exacerbating existing financial challenges in the power sector.
