As inter-corporate debt continues to bite energy companies, the power crisis is expected to deepen this month with Pakistan Electric Power Company (Pepco) projecting a shortfall of around 3,500 megawatts due to a drop in the release of water from Mangla Dam, sparking fears of worsening outages across the country.
According to documents, power companies will face increasing pressure in September as electricity demand will rise to 18,007MW against production of 14,430MW, leaving a gap of 3,577MW during peak hours. A month earlier, maximum power shortfall was recorded at 3,076MW during peak hours.
Talking to The Express Tribune, Pepco spokesman Ijaz Rafique said Mangla Dam was generating only 200 to 300MW of electricity due to less release of water as the dam was being filled after completion of the Mangla raising project.
He said water in the dam stood at the level of 1,207 feet, which would be enhanced to 1,210 feet and after the dam was filled, Pepco would start receiving 1,000MW of electricity. From Tarbela dam, he added, 3,600MW was being received.
Rafique said the commercial sector was closed during Eid holidays and there was no demand of electricity from them which enabled Pepco to manage the power shortfall and, “therefore, no power outages were carried out during Eid days.”
He said the government was negotiating with nine independent power producers (IPPs), who had served notices to the government invoking financial guarantees. The IPPs, with a combined power generation capacity of 1,800 megawatts, issued the notices after Pepco failed to make payments worth Rs31 billion for power purchase.
He said receivables of Pepco from government departments and private consumers stood at Rs300 billion. Of the total, government departments have to pay Rs142 billion.
IPPs with total receivables of Rs211 billion against Pepco have proposed to the government to own the liability of Rs150 billion which the IPPs have borrowed from banks to operate their plants. Banks are reluctant to give more credit to power companies as the IPPs have already crossed borrowing limits due to the runaway circular debt.
The government has already parked circular debt of Rs300 billion in a holding company to clear loans of banks against IPPs.
Published in The Express Tribune, September 4th, 2011.