Narrow Energy Limited (NEL), a subsidiary of Hub Power Company Limited (Hubco), has signed an amendment agreement with the Pakistan government and models to buy central energy (CPPA) to implement the main tariff reviews, including the introduction of a model “to take and pay”, according to a site in Pakistan on the Pakistan Stock Exchange on Wednesday.
The agreement, dated February 14, 2025, follows the recommendations of the work squad that was formed under the Prime Minister’s office to restructure the energy sector tariff.
The company said that the agreement, as of November 1, 2024, is reviewing the multiple financial aspects of NEL.
The indexing mechanism of operations and maintenance (O & M) has been changed, while the customs tariff components of working capital and O & M.
In addition, the return of the stock tariff component will now be paid under the “taking and pushing” mechanism of hybrid. The insurance premium tariff was crowned at 0.9 % of the cost of engineering, purchases and construction (EPC).
One of the main developments under the agreement is the government’s decision to withdraw arbitration procedures without registration or condition under previous agreements. Moreover, CPPA has committed to removing distinguished peaks as of October 31, 2024, within 90 days of the approval of the Council of Ministers. The agreement also includes a waiver of late late payment to October 31, 2024.
In addition, the arbitration requirement for the Energy Purchase Agreement (PPA) will be replaced, which transforms the arbitration forum from the International Arbitration Court in London (LCIA) into a process of arbitration of Islamabad seat under local laws.
The agreement is expected to enhance NEL’s financial prediction with stability in the context of purchasing energy in the country.
