Clearing IPPs debt: Govt submits Rs45b payment plan to court

Failure to pay up could result in 3 more hours of blackouts.

ISLAMABAD:

With electricity woes crippling the country, the ministry of water and power has submitted, in court, a schedule of payments aimed at clearing the infamous circular debt in the energy sector, on Friday.

Eight Independent Power Producers (IPPs) had earlier moved a petition claiming that the government’s inability to clear dues worth Rs61.4 billion, during the last couple of months, had worsened the power crisis in the country.

A three-member bench of the apex court, headed by Chief Justice of Pakistan Iftikhar Muhammad Chaudhry, is hearing the petition.

The chief justice adjourning the proceedings till August 15 remarked that the government will have to give concrete recommendations pertaining to ensuring IPPs payments.

Khalid Anwar, counsel for IPPs, had argued before the court that the government had acknowledged circular debt of up to Rs400 billion. He said if the government was unable to release payments to power producers then 3 hours 20 minutes additional load-shedding would occur daily in the country.

The eight companies, that have filed the petition, had earlier invoked sovereign guarantees given by the government. Nevertheless, they have decided to initiate local proceedings in the court of law rather than approach international arbitrators.

The petition questioned whether the failure of the government to honour its sovereign financial guarantees to IPPs was not an act of mis-governance fraught with grave consequences for the well-being and prosperity of Pakistan.

Khawaja Tariq Rahim, counsel for the ministry of water and power, has submitted a schedule regarding the clearance of circular debt of IPPs. He informed the bench that on the direction of the court the government has decided to pay Rs45 billion to the power producers.

He added that Rs8 billion have been paid in July, while Rs8 billion would be paid by August 30 and another Rs8 billion on September 30. The schedule for payment of the rest of the amount, Rs21 billion, is being prepared and would be submitted to the court soon.

The IPPs have made the federal government respondents in this petition through the ministries of water and power and finance, National Transmission and Dispatch Company (NTDC), Private Power and Infrastructure Board (PPIB), National Electric Power Regulatory Authority (NEPRA), Water and Power Development Authority (WAPDA), Pakistan Electric Power Company (PEPCO), Central Power Purchasing Agency (CPPA), the State Bank of Pakistan (SBP) and Independent Power Producers Advisory Council.

The court, currently deliberating on arguments from both sides, is likely to announce its decision on August 15 after analyzing responses submitted by the ministry of water and power and other private companies.

Published in The Express Tribune, August 11^th, 2012.