growth through energy

1
growth through energy
2
Board of Investment

• Advisory Board on Power
• The Hub Power Company Limited
• 19 November 2007

3
Hubco

• Large Foreign Investment
• Ist IPP
• Ist Private Sector Infrastructure Projects
• Developing 225 MW New Power Station in Punjab

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Issues

• Delayed Payments by WAPDA to IPPs (Rs in
  billions)
• Solution Immediate release of delayed payments
• Non Resolution of Tax on Development Cost Shares
  (Rs 1.9 billion) and delay in refund of Rs 297
  million deposited with the Appeal
• Solution
• Quick disposal of the case
• Impartial and well trained ADRC
• Binding decision
• Non-Resolution of Contractors Tax issue and
  delay in refund of Rs 373 million
• Solution Immediate implementation of ECC
  decision in letter and spirit

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Issues

• Delay in refund of Sales Tax of Rs 474 million
  for the months of Aug06, Jan07 and Aug07 due
  to delay in issuance of clarifications by FBR
• Solution Immediate Issuance of clarifications
  requested from FBR
• Delay in refund of Sales Tax of Rs 270 million
  for the moths of Jul07, Sep07 and Oct07 due to
  Change in Section 10 of Sales Tax Laws without
  consultation
• Solution Immediate change in law and refund of
  stuck up amount

6
Issues

• Problems in Development of New Power Projects
• Policy issues
• Late / Knee jerk reaction
• Poor Dissemination of Information (Fast Track
  Projects)
• Unrealistic Deadlines (Fast Track Projects)
• No consideration to availability of fuel (natural
  gas)
• Potential Developers incurred substantial costs
  on projects that never took off
• Problems in Procurement of Land at market rates
• State Support required
• Solution
• Private Sector Emphasis on Board
• Staffing ?
• Attitude Facilitation
• Expedite Paper Work
• One-Window

7
Issues

• Requirement of paying WPPF despite its being a
  pass through to WAPDA and its being reimbursable
  by the Government itself
• Solution Exempt IPPs from WPPF
• Refund of Customs Duty of Rs 40 million stuck
  since last 14 years
• Solution Immediate release of the amount
• Transfer of WPPO to PEPCO without prior
  consultation with IPPs causing concerns amongst
  shareholders and its impact on existing
  agreements

8
Issues

• Requirement for implementation of Uniform System
  of Accounts by NEPRA
• Done without prior consultation with IPPs
• Without any regard to the fact that IPPs follow
  IA/SCP/ICAP prescribed Intl Accounting Standards
• Implementation will involve substantial costs and
  time
• Solution Grandfathering provision for existing
  IPPs
• Requirement for implementation of lease
  Accounting by SECP
• Implementation involves costs and time and will
  cause concerns to Investors due to
  different/incomprehensible format of accounts
• US IPPs established before promulgation of the
  Standard exempt from Lease Accounting
• Solution Grandfathering provision for existing
  IPPs

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Recommendations

• Immediate release of IPPs dues by WAPDA
• Quick resolution of tax cases and refund of
  stuck-up amounts
• ADR to be made impartial and its decision made
  binding
• Immediate release of Sales Tax refunds
• Immediate change in Sales Tax Act (section 10)
• Immediate refund of customs duty stuck since 14
  years
• Power Policy Clear and pro-active long term
  policy prepared in consultation and participation
  of private sector
• Avoid abrupt changes to policies and laws without
  consultation
• Analyze Staffing requirements at PPIB and take
  necessary steps
• Implement One-Window operations at PPIB in
  letter and spirit
• Improve Co-ordination amongst Ministries and
  Departments
• Change in Attitude of Government functionaries -
  Facilitate Private Sector and be Proactive
• Exempt IPPs from WPPF
• Exempt existing IPPs from Uniform System of
  Accounts (NEPRA) and Lease Accounting (SECP)
• Expedite Power Sector Reforms
• Investment in electricity transmission and
  distribution
• Fast Development of Hydel and Alternate Energy
  Projects

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HUBCO 2007 and Beyond

• VISION
• To be an energy leader committed to deliver
  growth through energy.
• MISSION STATEMNET
• To be a dynamic and growth orientated energy
  company that achieves the highest international
  standards in its operations and delivers a fair
  return to its shareholders, while serving the
  community as a caring corporate citizen.