Four independent power producers (IPPs), which invoked sovereign guarantees last week for the release of outstanding dues, have withdrawn their notices in the wake of assurances given by the government that Rs8 billion will be released before the end of June.
Sources told The Express Tribune that representatives of four IPPs – Liberty Power, Atlas Power, Nishat Power and Nishat Chunian – held a meeting with Water and Power Minister Naveed Qamar on Tuesday to resolve the issue of non-payment for electricity supply.
The minister assured IPPs that payments would be made in a week, sources said, adding the water ministry had already sent a summary to the finance ministry for release of Rs11 billion.
IPP representatives were convinced that encashment of government guarantees could negatively affect the image of Pakistan globally, creating hurdles in the way of investment.
The IPPs, which have a combined power generation capacity of 800 megawatts, had invoked sovereign guarantees last week, seeking payment of their outstanding dues of around Rs10 billion.
Under power purchase agreements, the government and public sector enterprises have less than 10 days after IPPs serve final notice or invoke sovereign guarantees. In this case, the deadline was Friday but the water ministry resolved the issue on Tuesday.
This is the second time that private power producers have invoked sovereign guarantees for recovery of dues, though non-payment has become routine in the energy sector due to swelling inter-corporate circular debt. Earlier, Hubco had threatened to call sovereign guarantees in 1998, but the government swiftly made payments to block the move.
Published in The Express Tribune, June 22nd, 2011.
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