Violent street protests in Punjab forced the federal government on Tuesday to send urgent directive to the National Transmission and Despatch Company (NTDC) and the power distribution companies (DISCOs) to refrain from charging fuel price adjustment (FPA) for four months already determined by the regulator until a new mechanism was devised. A letter sent by the water and power secretary, addressed to the NTDC managing director, Pakistan Electric Power Company (PEPCO) chief financial officer and chief executives of all DISCOs directs strict compliance with the instructions. The National Electric Power Regulatory Authority (NEPRA) had earlier allowed DISCOs to recover Rs 6.39 per unit from consumers for the four month period of October 2011 to January 2012.
The government wanted recovery on a monthly basis but the DISCOs were planning four months recovery in one go as allowed by the regulator. This would have added fuel to the fire, the source said. The letter directs withholding of the collection of the FPA determination of NEPRA until the ministry devises a suitable mechanism for the collection. All the DISCOs operating in Punjab have a recovery ratio of more than 90 percent while the rest operating in other provinces have recovery of around 50 percent. Hard-pressed Punjab is demanding provision of electricity on the basis of the recovery while the federal government is non committal on the demand. Meanwhile, the government received a fresh jolt from 10 independent power producers (IPPs) including Nishat Power, Nishat Chunian, Atlas, Liberty, Halmore, Sapphire, Saif, Orient, Rausch and Saba who warned invoking of sovereign guarantees against their dues of over Rs 42 billion were not cleared by April 19. The total liability of the IPPs is over Rs 320 billion. They have threatened to shut down their operations if their dues were not cleared. They collectively have generation capacity of 2100 megawatts. Under the agreement with the IPPs, the government is bound to make payment on behalf of the NTDC/PEPCO if they fail to make payment. If the government too fails to clear their dues after receiving notice, IPPs could invoke the sovereign guarantees. The IPPs have already twice invoked the sovereign guarantees during the last one year. The government has managed to get breathing space after making paltry payment to IPPs with the assurance that it would be taking steps to clear their liabilities.
