LONDON, UK, Dec. 20, 2000 (BUSINESS WIRE)International Power plc has reached a settlement agreement with the Islamic Republic of Pakistan, the Pakistan Water and Power Development Authority (WAPDA) and The Hub Power Company Limited (HUBCO).
The Dec. 17 settlement resolves a three-year tariff dispute over electricity produced at the 1,200 MW Hub Power Project. International Power has a 25.7% equity interest in HUBCO.
The agreement is the product of extensive discussions in recent weeks between the three parties. Signatories of the agreement are M. Zafarullah Khan, Secretary of Water and Power, on behalf of the President of the Islamic Republic of Pakistan, Lt. Gen. Zulfiqar A. Khan, Chairman of WAPDA, and Mohamed A. Alireza, Chairman of HUBCO.
Peter Giller, International Power’s Chief Executive Officer, joined Alireza in representing HUBCO in the negotiations.
“The agreement represents hard work and a fair compromise on a complex set of difficult issues,” said Peter Giller. “Restoration of a normal revenue stream will enable HUBCO to resume dividend payments to International Power and other investors which have been suspended since 1998 owing to the tariff dispute,” he added.
The centerpiece of the settlement is a reduction of the power tariff that WAPDA pays HUBCO. In a typical year, the revised agreement is expected to generate a cash flow of (pound)10 million to International Power. In addition, there will be a receivable due to HUBCO reflecting past underpayment for electricity.
One third of this owed balance will be paid on March 31, 2001. The rest will be paid in six semi-annual installments, with interest.
The agreement contains provisions for the discontinuance of the existing legal actions. Furthermore, the Agreement is subject to approval by Pakistan’s Federal Cabinet, the WAPDA Authority, and HUBCO’s Board of Directors, Shareholders and lenders.
“The negotiations were successfully concluded because all of the parties were committed to establishing a sustainable commercial relationship for the duration of the contract,” Giller said.
International Power is one of the world’s largest independent electric generating companies with over 6,700 megawatts (net) in operation, 4,500 MW (net) under construction and approximately 8,000 MW (net) in advanced development. Among the countries where International Power has operating facilities are Australia, the United States, the United Kingdom, the Czech Republic, Portugal, Spain, Turkey, Malaysia, Pakistan, and Thailand. International Power was created from the demerger of National Power, and its shares began trading independently on the London Stock Exchange and as ADRs on the New York Stock Exchange on 2 October, 2000. The ticker symbol on both stock exchanges is “IPR”.