Power sector dues: Inter-corporate debt beginning to pile up

Debt reaches Rs216 billion, raises spectre of increased blackouts.

LAHORE: At a time when power outages, especially in mega cities, have gone down sharply and people are about to forget up to 20 hours of blackouts, the independent power producers (IPPs) are once again raising the spectre of increased outages as the inter-corporate debt is re-emerging and has reached Rs216 billion.

“Of the total, the amount owed to the IPPs is Rs152.5 billion,” said Abdullah Yousaf, IPPs Advisory Council chairman, while talking to The Express Tribune.

“The debt of Rs216 billion was recorded by December 2, if we add another nine days, then it will reach around Rs225 billion,” he added.

Before the debt started piling up, the current government, after coming to power in June this year, cleared the previous circular debt totalling Rs500 billion for the period up to February-March.



It seemed that the government after clearing the earlier debt was paying no more attention to the issue, which once again was going to become a nuisance for the power producers, commented a top official of an IPP.

IPPs were hinting at the possibility of invoking sovereign guarantees, if the government did not immediately address the issue, he said, citing the process of invoking the guarantees in 2011-12 when the dues were much less than Rs200 billion.

The debt is mounting primarily due to delay in payments and unresolved power sector issues, including the disparity between the cost of power generation and the amount charged, poor recovery by distribution companies and electricity theft.

According to the breakdown, the government owes Rs56.726 billion to generation companies, Rs3.775 billion to Chashma Power, Rs3.477 billion to hydroelectric power plants, Rs44.446 billion to independent power producers (2002 policy) and Rs108.075 billion to the IPPs (1994 policy).

The IPPs include Kapco, Hubco, Rousch Power, Uch Power, AES Pakgen Power, Liberty TNB Gas, AES Lal Pir Power, Liberty Power, Nishat Power and others.

“A smooth and continuous clearance of dues is critical to ensure uninterrupted power generation. For that, the IPPs are ready to support the government through power generation at full capacity,” the official added.

Published in The Express Tribune, December 12^th, 2013.

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