Independent power producers (IPPs) on Tuesday issued final notices to the federal government for the clearance of outstanding debt of over Rs 121 billion within 30 days. The country is likely to face another power crisis as over 825MW of electricity would go off the grid with the closure of four major IPPs.
Official documents made available with Pakistan Today indicate that four major power producers – Nishat Chunia Power Ltd, Nishat Power Limited, Liberty Power Limited and Atlas Power Limited – have written to the government of Pakistan through the Private Power and Infrastructure Board (PPIB), pointing out that the National Transmission and Dispatch Company (NTDC) had failed to clear billions of rupees in outstanding debt.
The IPPs said they had put numerous requests with NTDC per the requirement of the Power Purchase Agreement (PPA), but in vain. The power producers have asked the government of immediately fulfilling its contractual obligation under the PPA. Figures reveal that total outstanding dues of all IPPs stand at Rs 121.793 billion as on May 13, 2011, of which Nishat Chunian Power is to receive the highest outstanding amount of Rs 4.628 billion, followed by Nishat Power’s Rs 4.5 billion, Liberty Power’s Rs 3.719 billion and Atlas Power’s Rs 3.583 billion.
Talking to Pakistan Today, a senior official of a power generation company lamented that the government’s attitude had compelled the IPPs to stand up for their rights, as the state machinery was not paying attention to the problems of the power producers. He said they had already raised concern over the unjust payment mechanism and the circular debt had now forced the power producers to invoke sovereign guarantees, which were committed while power purchase agreements were signed.
Criticising the discrimination in payment, he said IPPs established in the 1990s were given monthly capacity charges besides consistent fuel supplies. However, IPPs established under the Power Policy 2002 were not being paid any capacity charges and were required to purchase fuel from their own resources. They were given payments after supply of electricity.
“But, if we fail to purchase fuel owing to mounting circular debt, we are penalised for not supplying power,” he added.
The source said some IPPs might be in a position to wait for payment or had been assured of fuel supply by Pakistan State Oil (PSO) or gas companies. However, new IPPs did not enjoy the same facility under PPA signed after 2002.
Economic experts say if the government fails to meet its contractual obligations and IPPs invoke sovereign guarantees, it would leave critical consequences for the economy and hurt the country’s credit rating and foreign direct investment.
