ISLAMABAD, Aug 10: The government has asked the National Electric Power Regulatory Authority (Nepra) to grant provisional licences to all the independent power producers (IPPs) to address concerns being raised by the international lenders about the legal position of their operations, Dawn has learnt.

A water and power ministry official said on Sunday that “operations of all the IPPs are technically illegal, which was a cause of concern to their lenders.”

He said all the agreements with the IPPs were signed in 1995-96, before the creation of Nepra in 1997.

Now, under the Nepra Ordinance, it is mandatory for all plants generating electricity for sale to possess generation licences from Nepra. However, Nepra has not issued a license to any IPP, despite holding a number of seminars and workshops on the subject.

Currently, 21 IPPs are selling electricity to the Water and Power Development Authority and the Karachi Electricity Supply Company.

Over 50 foreign banks and investment companies, including the World Bank, have extended loans to the sponsors of the projects costing more than $3 billion.

The official said the matter was discussed recently at the 40th meeting of the Private Power and Infrastructure Board and it was decided that concerns of the international lenders should be addressed, although there was no question of disruption in the sale of electricity by the IPPs.

The board had informed the government that it was receiving letters from the IPPs and their lenders calling for immediate resolution of the issue.

The board was informed that Nepra was preparing a uniform model licence for all IPPs but if it was not acceptable to the IPPs, it would pose a serious problem to the government.

The petroleum and natural resources secretary suggested that inspiration should be drawn from the procedure under which the Oil and Gas Regulatory Authority had swiftly legitimized the operations in its sector, including all the petroleum and exploration companies.

Under the process, all the companies had been deemed to be licensed until final determination of their licences.

Accordingly, the ministry has issued appropriate guidelines to Nepra under Section 7(6) of the Nepra Act to issue provisional licences to the IPPs till the completion of the proceedings in this regard.