All
Authorized Dealers
In Foreign Exchange,
Dear
Sirs,
PRIVATE
POWER PROJECTS IN PAKISTAN – OPENING OF FOREIGN CURRENCY
ACCOUNTS
In terms
of para
5 of Chapter
VI of the Foreign Exchange Manual (7th Edition
– 1992), permission of the State Bank is required to
open and maintain Special Foreign Currency Accounts. As
an exception to this rule, the Authorized Dealers may open
following Special Foreign Currency Accounts/Off-shore foreign
Currency Accounts in respect of Private Power Projects in
Pakistan as per the Implementation Agreements (IAs) entered
into with Private Power & Infrastructure Board (PPIB),
Government of Pakistan. These accounts will be maintained
during the construction and operation of the projects for
the purposes and subject to the conditions mentioned against
each:-
| I. |
Special
Foreign Currency |
For deposit
of foreign equity and foreign currency loan under
the loan agreements registered with the State Bank.
These amounts will be utilized for the purposes of
the project as provided for in the Implementation
Agreements (IAs). |
| II.
|
Special
Foreign Currency Insurance Account. |
For depositing
amounts required for payment of insurance/reinsurance
premier and for receiving insurance/reinsurance claims
against covers taken in foreign currency outside Pakistan
with the approval of the Controller of Insurance or
State Bank where cover in foreign currency is taken
with an insurer in Pakistan, provided that amounts
not required for meeting expenditure in foreign exchange
e.g. for import of machinery, will be repatriated
to Pakistan (i.e. converted into rupees). |
|
Off Shore
Foreign Currency Accounts: |
|
|
(a)
Off Shore Foreign Currency Control Account. |
This
will be maintained subject to the condition that
PPIB would determine for each project the portion
of revenues required to meet the foreign currency
cost Of the project. |
|
a(i)
Off Shore Foreign Currency Operating Account. |
This will
be maintained subject to the condition that O&M
expenses to be remitted/deposited periodically to
this account will be apportioned by the PPIB. |
|
a(ii)
Off Shore Disputed Payment Escrow A/C. |
This will
be maintained subject to the condition that the payment
will be remitted to Pakistan once the dispute is over. |
|
a(iii)
Off Shore Foreign Currency Debt Payment Account. |
This
will be maintained for depositing the amount required
for debt service. |
|
a(iv)
Off Shore Debt Service Reserve Account. |
This will
be maintained subject to the condition that this account
will be Liquidated simultaneously with the retirement
of debt and that the maximum balance in this account
would not exceed the next twelve months debt service
payment (both principal and interest). |
|
a(v)
Off Shore Foreign Currency Maintenance Reserve Account. |
This will
be opened and maintained subject to the condition
that this account will be liquidated simultaneously
with the life of the agreement and that this account
will hold a maximum of US$ 3 Million during the term
of Power Purchase Agreement. |
|
a(vi)
Off Shore Foreign Currency Dividend Account. |
This will
be used for receiving remittance of dividends as and
when the dividends are declared by the company. |
|
|
|
2. A monthly
statement on the form prescribed in Annexure ‘A’
to this Circular will be submitted for each account separately
alongwith a Certificate from the Company’s auditors
to the effect that the payments made from the accounts are
strictly in accordance with or covered under the Implementation
Agreement, Power Purchase Agreement or other agreements
if any approved by the Government (PPIB).
3. Interest
income earned on the accounts opened in terms of this Circular
will be repatriated to Pakistan.
4. There
will be nil balance in the main Control Account and all
other Accounts after the expiry of the relevant agreement
period.
5. Any earnings
from dealing in currency/exchange should also be repatriated
to Pakistan.
6. The Authorized
Dealers are also advised to ensure that income tax wherever
due on payments made through the accounts is duly deducted
and paid to the Income Tax Authorities.
7. Code Nos.
for payments/receipts will be advised separately.
8. Authorized
Dealers may also open Special Foreign Currency Accounts
of the foreign EPC (Engineering, Procurement & Construction
) and O & M (Operation & Maintenance) contractors
of the Power Projects operating in Pakistan with the approval
of the Government (outside the Foreign Currency Account
Scheme) for receipt of foreign currency amounts under the
contracts awarded to them by the Power Projects & its
utilization in accordance with the EPC/O & M contracts.