Four power producers invoke sovereign guarantees

Demand payment of outstanding Rs10b from government.

KARACHI:

Four independent power producers (IPPs) have invoked sovereign guarantees after a notice issued to the state-run power company, Pepco, a month ago for payment of outstanding dues failed to resolve the issue, industry sources said.

The four IPPs – Nishat Chunian, Nishat Power, Liberty and Atlas Power – issued a notification on May 13, seeking payment of overdue amount from the National Transmission and Dispatch Company (NTDC). However, officials of power companies said, after the passage of 30 days, the amount remained unpaid. They said the matter of payment was now between the government and the IPPs as the power purchaser, Pakistan Electric Power Company (Pepco), had already defaulted.

They said if the government failed to pay the remaining amount of Rs10 billion, out of Rs16.43 billion, it would be considered a defaulter. Any delay would tarnish the country’s image as global rating agencies would consider the response time of the government in case sovereign guarantees were invoked, they added.

They said the IPPs, which have power generation capacity of around 800 megawatts, were left with no money to buy fuel for production of electricity and they invoked sovereign guarantees as a last resort.

They claimed the government was not taking needed measures to address the challenges being faced by the IPPs and the whole industrial base would face the consequences if the power companies shut down as the country was already going through an energy crisis.



Published in The Express Tribune, June 16th, 2011.