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Finance ministry refuses to pay capacity charges

A dispute with eight independent power producers (IPPs), which are in a legal battle with the government after calling the sovereign guarantees, is feared to linger on as the ministry of finance has refused to pay 100 percent capacity charges to these IPPs, official sources said.

The IPPs have sought 100 percept capacity charges from the government in case they fail to get fuel to run their plants due to circular debt.

The government authorities desire an out of court settlement but IPPs want resolution through the court. The total over due payable amount to IPPs is Rs44.939 billion as of July 13, 2012 in accordance with the CPPA central power purchase agreement.

As per minutes of a meeting held on July 23 between government functionaries and representatives of IPPs, the cash-strapped ministry of water and power agreed to pay Rs24 billion in 45 days in three equal tranches of Rs8 billion.

“However, IPPs insisted for full payment of Rs44.939 billion in one go,” according to minutes of the meeting. Sources said that the ministry of water and power has decided to apprise the Economic Coordination Committee (ECC) about update situation with IPPs on payment of dues dispute so that the future course of action to resolve the dispute could be decided. Since the ECC did not meet owing to which the issue could not be deliberated in the ECC meeting.

“We wanted to apprise the ECC that the ministry of finance has refused to extend the deemed duty that IPPs had demanded and after the denial by the finance ministry we wanted the next way forward,” an official at the ministry of water and power told The News.

Sources said that there are some senior officials at the ministry of water and power who had come up with severe opposition to the provision of deemed duty to IPPs arguing it would be treated as a big scam and no one can afford to give such facility to IPPs at a time when the Supreme Court has zero tolerance on decisions creating burden on the national exchequer.

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