KARACHI: With the power crisis worsening with each passing day, it seems the consumers’ misery has failed to convince the government to take serious measures for redressing the root causes of the problem, the circular debt issue being the foremost one.
Further, the politically-embattled federal government also seems slapdash towards its commitments with international power companies, like M/s MAN of Germany, in terms of the timely materialisation of the Construction Contract.
Immediate payment: According to sources, the Water and Power Development Authority (WAPDA) is yet to clear outstanding dues of at least Rs 75 billion to the Hub Power Company Limited (HUBCO). Of the total arrears, around Rs 69 billion had to be paid immediately, they added. WAPDA’s default on HUBCO’s dues rendered the latter unable to repay around Rs 68 billion owed to the Pakistan State Oil (PSO) that supplied fuel to the Hub Power Plant.
“One of the consequences arising from this situation has been that the fuel supplied by PSO has been insufficient to meet the plant’s minimum operational requirements,” stated a HUBCO Board of Directors report for the quarter that ended on September 30 this year.
Lashing out at WAPDA for its inability to meet obligations under the Power Purchase Agreement (PPA), HUBCO said that due to the shortage in petrol supplied by the Pakistan State Oil, the Hub plant had operated at an average load-factor of 76 percent and an Average Complex Availability (ACA) of 87 percent during the period under review.
While the electricity sold to WAPDA was 2,012 Giga Watt hour (GWh). “The company’s obligation to PSO remains covered by a Stand-by Credit Letter of Rs 8 billion provided by HUBCO to PSO under our Fuel Supply Agreement,” the report said.
Credit letter: HUBCO, which is in constant contact with the WAPDA authorities and the federal government for the early release of the outstanding amount, also complained that the authority was also unable to provide a Letter of Credit to HUBCO, as required under PPA, for an amount of Rs 12.92 billion.
“The obligations of WAPDA under PPA are secured through the Sovereign Guarantee of the government of Pakistan under its Implementation Agreement with HUBCO,” the company reminded WAPDA authorities. Further, the power plant operator was also critical of the repeated extensions in the commissioning of its 214-megawatt Narawal project, caused by a “major CVT equipment failure” on August 26 this year.
The company asked the authorities concerned in Islamabad to recall their commitment under the Construction Contract with Germany’s M/s MAN on the delivery of commercial operation by March 31. The date was extended by the contractor to October 31 and a financial settlement was negotiated by the company with MAN.
“Following this unfortunate CVT incident, the company believes a completion date of February 2011 is expected to be achievable,” it stated. HUBCO, however, said its technical team, the contractor and the equipment supplier were in the process of determining the best method and solution to mitigate the damage with particular focus on phased commissioning to offset the financial losses.
According to HUBCO’s quarterly report, the company earned a net profit of Rs 1.269 billion during the quarter that ended on September 30, resulting in earnings per share of Rs 1.10 compared to a net profit of Rs 1.108 billion and earning per share of Rs 0.96 in the corresponding period last year. “The increase in profit is mainly attributable to currency devaluation and efficiency gains,” it said.
