As mercury rises, so do tempers
A slow dance, as always, between the government, the independent power producers and the oil marketing companies.
Come summertime, the government, strapped for cash, is unable to pay the IPPs their pound of flesh. For the ongoing fiscal year, that deficit is 3.8 per cent. The amount due is more than a whopping Rs 250 billion.
It isn’t merely that the government is not paying the IPPs. It is twisting the knife by taking them to task for their attempts to rally public support for their cause. The Private Power Infrastructure Board has first written to the 13 IPPs that had invoked sovereign guarantees for a portion of their dues.
And then it has also put them on legal notice for launching what the government deemed was a smear campaign in the local newspapers; the Board trashed the IPPs’ seeking “extraneous” methods to “malign the government and its entities through newspaper advertisements containing ill-founded, baseless, disparaging, malicious and false statements and insinuations.”
Now, though it might appear that the government is being a bit too harsh with the IPPs, the government can, in effect, throw the book at the latter. First of all, the government says “The purported demand under the Guarantee, among others, was neither made in the prescribed manner nor any prior written default notice for non-payment by the power purchaser of such claimed amount was served on the government.” But analysts well versed with the government’s fiscal profile say there isn’t enough money even if the IPPs had followed all the procedures down to the letter.
Alas, the government’s problems are not only limited to the Rs 253 billion that it owes to the IPPs. If one were to take into account the amounts due to the public sector power companies, the total amount that the government has to cough up would be Rs 414 billion.
In situations like these, for reasons of political expediency if nothing else, perhaps it would do the government good to avoid being churlish with the concerned organisations. The public, at the risk of stating the obvious, does not take well to electric load shedding during the summers.
