Press Releases
20/12/2000
Settlement Agreement Reached in HUBCO Tariff Dispute
International Power plc today provides information about the Settlement Agreement reached on 17 December, 2000 by and between the Islamic Republic of Pakistan, the Pakistan Water and Power Development Authority (WAPDA) and The Hub Power Company Limited (HUBCO) to resolve a three-year tariff dispute over electricity produced at the 1200 megawatt (net) Hub Power Project. International Power has a 25.7% equity interest in HUBCO.
The Agreement is the amicable product of extensive discussions in recent weeks between the three parties at the most senior executive level. 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 Mr. 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 Agreement is a reduction of the power tariff that WAPDA pays HUBCO. In a typical year, the revised Agreement is expected to generate a cashflow of £10 million to International Power. In addition, there will be a Receivable due to HUBCO reflecting past underpayment for electricity. One third of the Receivable will be paid on 31 March, 2001. The balance will be paid in six semi-annual installments, with interest.
The Agreement contains provisions for the dis-continuance 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.
Peter Giller said : "The negotiations were successfully concluded because all of the parties were committed to establishing a sustainable commercial relationship for the duration of the contract."
Investor contact:
Grant Jones
44-207-320-8619
Notes to editors
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".
