ISLAMABAD: Prime Minister Shahid Khaqan Abbasi has been approached by Independent Power Producers (IPPs) to resolve a deadlock that resulted in the government failing to fulfill its legal obligations.
In a letter addressed to the Prime Minister, IPPs Advisor Council (IPPs) stated its financial problems had compounded and copies of it were also sent to Federal Minister for Power Division, Awais Ahmad Leghari, Secretary Power Division and Secretary to Prime Minister, reported Business Recorder.
In September, Profit reported about the London Court of Arbitration’s (LCA) decision to fine Pakistan Rs11 billion partial penalty in a case brought forward by eleven IPPs.
LCA had initially issued a partial penalty due to which expert award became final and binding because of NTDC’s failure to comply with the instructions or move the court within a time span of 75 days.
The fine has to be paid to the nine IPPs and will include payment of interest at Kibor of 4.5pc. IPPs responsible for having the brought the case against Pakistan in LCA were: 1) Halmore Power Generation Limited 2) Nishat Chunian Power Limited 3) Hub Power Company 4) Sapphire Electric Company Limited 5) Orient Power Company 6) Atlas Power Limited 7) Liberty Power Tech Limited 8) Nishat Power Limited 9) Saif Power Limited.
The government is now resorting to delaying tactics in implementation of the award as it has approached a local court in this regard. IPPs face a dire financial crunch because large overdue receivables from NTDC and CPPA.
Till October 31st, the verified amount owed by CPPA and NTDC stands at Rs195b which is payable to 20 IPPs. And an additional Rs130-150b are also owed to other power generation companies too.
IPPs have requested Ministry of Energy (MOE) since last few months to clear its overdue payments, but it expressed a lack of financial resources for making the payment.
According to an official, IPPAC in its letter stated that it had not invoked the sovereign guarantees to provide ample time to government for clearing its dues. Despite mounting receivables, IPPs have resorted to obtaining loans from commercial banks to run its operations.
Due to heavy borrowing from banks and receivables owed by the government, IPPs have inadequate cash flows for meeting financial requirements to its lenders, operators, fuel suppliers and other third parties.
Aside the outstanding receivables owed to IPPs, another Rs130b are overdue on account of GST refunds due to electricity generators by FBR which is counting it as its own cash collection.
