ISLAMABAD (July 06 2009): Advisor to Prime Minister on Finance, Shaukat Tarin will hold a meeting with the Presidents and Chief Executive Officers (CEOs) of banks and DFIs at National Bank of Pakistan (NBPs) head office in Karachi on Monday to finalise loan facility arrangements for 14 percent advance payment to rental power projects, official sources told Business Recorder. Surprisingly, Pepco\'s officials acknowledged before more than two dozen stakeholders, including Asian Development Bank (ADB) that the planned rental power plants are ineffective and expensive. Most of the banks are reluctant to issue Standby Letters of Credit (SBLCs) for whole tenure of the contracts due to their excess exposure on power sector and their own constraints. Rental power projects are being added on the basis of 36-60 months tenure with 7 to 14 percent advance payments, and SBLC or GoP guarantee, as security. In pursuance of rental service agreement, Pepco approached all major banks for issuance of SBLC for the entire tenure of contracts, but the banks could not establish required SBLC for all rental power projects due to excess banks\' exposure on power sector, and their own constraints. "Now, Lessors are accepting GoP\'s guarantees, or one-year SBLC, in lieu of SBLC for the whole tenure, but with additional 7 percent advance payments, totalling 14 percent," sources said. As per section 152 (payment to the non-resident) and section 158 (time of deduction of tax) of the Income Tax Ordinance 2001, it is mandatory for Pepco/gencos to deduct tax at source out of advance payments. With various amendments in the rental service contract due to non-availability of SBLC, lessors are concerned about these deductions and are agitating against them. On the other hand, opening of these disputes with the lessors would bring delays in the said rental power projects, sources added. The invitees of the Monday meeting are: Presidents of NBP, HBL, UBL, ABL, MCB, and Askari Bank, CCO of Citibank, CEOs of Faysal Bank, Standard Chartered Bank, RBS, Barclays Bank, and HSBC, Presidents of Bank Al Habib, Silk Bank, Alfalah Bank, Bank of Punjab, NIB Bank, Habib Metropolitan Bank, Soneri Bank, Bank of Khyber, Arif Habib Bank, JS Bank, KASB Bank, My Bank, and Emirates Global Islamic Bank, and MDs of Pak China Investment Company, SPIAICO Limited, Pak Kuwait Investment Company, Pak Brunei Investment Company, Pak Oman Joint Investment Company and Pak Iran Investment Company. In April 2009, the Economic Co-ordination Committee (ECC) of the Cabinet had allowed the Ministry of Water and Power to arrange SBLC, on yearly basis, through GoP guarantees, to rental power projects (RPP), to be executed by Pepco/PPIB.