Independent power producers (IPPs) are finding it increasingly difficult to continue running their plants as their outstanding receivables have swelled to Rs230.5 billion, eating up their reserves and denting their ability to service loans.
In a letter signed by all 22 major IPPs and sent to Finance Minister Ishaq Dar, they sought the minister’s help and asked him to save the power producers from collapse.
“IPPs have exhausted all their resources in order to repay loan liabilities, which has put their shareholders at a disadvantage. Loans taken for working capital needs have been serviced from the shareholders’ pocket,” the letter quoted them as saying.
They argued that the private power producers would not need working capital if they were paid by the electricity purchasers according to the schedule agreed in the power purchase agreement.
Even capacity payments had been withheld, which were needed to service long and short-term project loans, make insurance payments and pay salaries to the staff, they said.
The outstanding capacity payments have reached Rs54.138 billion, of which Rs27.945 billion is overdue for more than 90 days. Apart from this, a huge amount of Rs50.6 billion has to be paid as interest following long delay in payments for the purchased electricity.
Experts point out that the huge payments could have been avoided had the power purchasers honoured their pledge for timely clearance of bills.
According to the letter, of the total receivables of Rs231.558 billion, a major chunk of Rs131.308 billion is to be paid to Hub Power Company (Hubco) and Kot Addu Power Company (Kapco).
The IPPs that signed the letter included Hubco, Kapco, AES Lalpir, AES Pakgen, KEL, Liberty (Gas), UCH, Rouch, Fauji, Habibullah, AGL Power, Hubco Narowal, Atlas Power, Nishat Power, Nishat Chunian, Liberty Tech, Orient Power, Saif Power, Sapphire Power, Halmore Power, Uch-II Power and Engro Power.
The figure does not include the amount outstanding against Saba Power, Foundation Power and New Bong Hydropower.
Published in The Express Tribune, September 14th, 2014.
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Only in Pakistan. Receivables aren't an issue with power generators anywhere else. In the rest of the World if you don't pay your bill then they stop providing services - simple simple stuff.
This is what happens when you clear the circular debt with no Audit and no plan on how to prevent it from ballooning again .This was expected from his senseless and shameless Govt.
Imran is 100% right about them trust me
Hubco and Papco should shutdown shop. We are not going to pay, end of story.