Power dues: IPPs ask govt to invoke sovereign guarantees

Four independent power companies give 30-day deadline to pay dues.

KARACHI:

Private power producers have called for invoking sovereign guarantees made in the power purchase agreements with the government in order to recover billions of rupees owed by the Pakistan Electric Power Company (Pepco), sources say.

Four independent power companies – Nishat Chunian, Nishat Power, Liberty and Atlas Power – have issued a 30-day notice to the government, asking it to pay its outstanding dues. Ten days of this 30-day deadline have already passed.

Power sector sources said private power producers were facing an acute financial crunch because of piling up of outstanding dues and they were unable to purchase furnace oil to run their plants.

According to sources, if no progress is made during the 30-day deadline, the companies will serve a final notice of 10 days to the government, after which power plants will be closed. This will cause a loss of 800 megawatts to the national grid.

Sources said any further delay on the part of the government might be detrimental to the economy and non-compliance with sovereign guarantees would bring down credit ratings of the country.

The government owed Rs121.79 billion to the independent power producers (IPPs) by May 13. Nishat Chunian has receivables of Rs4.63 billion, Nishat Power has receivables of Rs4.5 billion, Liberty has receivables of Rs3.72 billion and Atlas Power has receivables of Rs3.58 billion.

Earlier, IPPs had also demanded release of money for electricity sold to Pepco as the unending circular debt had impeded the operations of the entire energy chain from fuel suppliers to power producers.

Published in The Express Tribune, May 25^th, 2011.