The Company is managed through a suite of agreements signed between it and its customer Central Power Purchasing Agency (Guarantee) Limited, Government of Pakistan, and fuel suppliers. These include:
Power Purchase Agreement (“PPA”)
The PPA is between Central Power Purchasing Agency (Guarantee) Limited and KAPCO. Inter alia, the PPA determines the tariff structure and principles of operating the Power Plant. The PPA includes an implicit return built into the tariff provided. KAPCO maintains its available capacity at the contractual level identified in the PPA. KAPCO has robust and effective engineering, financial, procurement and HR strategies in place to ensure that contractual capacity levels are maintained. Over the last two years, dependable capacity levels have been significantly above the contracted levels.
Gas Supply Agreement (“GSA”)
The GSA is between Sui Northern Gas Pipelines Limited (“SNGPL”) and kapco. Inter alia, the GSA guarantees a certain quantity of gas deliveries during off peak months from SNGPL.
Oil Supply Agreement (“OSA”)
The OSA is between KAPCO and Pakistan State Oil Company Limited (“PSO”). PSO is the largest oil marketing company in Pakistan and is engaged in the nationwide storage, distribution and marketing of various petroleum, oil and lubricant products. Inter alia, the OSA covers the supply to KAPCO of fuel, diesel, oil, greases, lubricants and additives for the requirement of the Power Plant.