2 IPPs stop power supply to KESC

The two Independent Power Producers (IPPs) in the city have switched off their power supply to Karachi Electric Supply Company (KESC) as KESC, which is also not paying billions of rupees in dues to WAPDA, SSGC and PSO has also stopped paying for over 250 megawatts it receives from the IPPs.
Whilst facing a severe financial crisis, the IPPs including Gul Ahmed Energy Ltd and Tapal Energy Ltd, having a current power generating capacity of 125 megawatts each, have halted their plants as they were even unable to pay for purchasing furnace oil from PSO, sources told Pakistan Today.
As these IPPs pay the amount in advance to PSO for purchasing fuel, they were unable to make the payment for the last 22 days while keeping their plants shut, sources added. KESC, which is not paying around Rs29 billion to SSGC, Rs9 billion to PSO and billions of rupees to WAPDA was also not paying dues to these private companies.
The privately run public utility, sources claim, owed almost Rs2.6 billion to Gul Ahmed, one of the IPPs. Interestingly, KESC had also stopped payments made for IPP’s to purchase fuel, as the billions of rupees worth old dues, the former owed to the private companies were also not being paid for year. According to sources, the IPPs had earlier given a relaxation to the power supply company that it should at least pay as much as required to run the engines.
However, the dues, which were recorded at almost Rs7 billion in 2009, had not been paid to the IPPs, despite repeated letters and notices issued to KESC. According to sources, soon after the transfer of managerial control of KESC to the new management, the IPPs had started facing persistent payment faults. Such crisis, as they said, had never happened in the last 14 years after the Power Purchase Agreement (PPA) agreement had been signed between KESC and the private power companies.
The new management, they alleged, was blackmailing these IPPs, which have already completed the 10 years agreement with the government and were supplying the agreed upon megawatts of electricity without any disruption. The move, sources said, has fallen heavily on the load shedding-stricken Karachiites who are now facing 10 to 12 hours of unscheduled power outages in the wake of an additional shortfall of at least 250 MW. However, sources in the KESC Share Holders Association, questioned where the finances of the company were directed to, as it was neither paying fuel suppliers nor WAPDA, from which the company receives over 600 MW regularly. They said that the company’s monthly revenue was around Rs8-9 billion but no payment was being made to fuel suppliers. Interestingly, despite all these facts, the high ups in the government, were favouring the private company through providing subsidies and furnace oil on gas rates. Recently, they said, the Ministry of Petroleum, has forced both SSGC and PSO to provide uninterrupted gas and furnace oil respectively, without making any payments to these two organisations which were struggling with financial constrains caused by the non-payment of dues by KESC.