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IPPs serve final notice to govt

As many as eight Independent Power Producers (IPPs) have submitted their final 10-day notice to the government seeking the clearance of their outstanding dues of Rs34 billion on Thursday, sources said.

This notice of sovereign guarantee is to end on May 02, 2012, after which they will shut down their plants, as they will not be in a position to buy more fuel to run the plants. Earlier, these 8 IPPS served the initial notice to the government for their payments of Rs34 billion, which Pakistan Electric Power Company (PEPCO) had failed to pay within the prescribed time.

Sources in the advisory council of IPPs informed that they would also serve the final notice for recovery of another Rs 9.0 billion to the government, for which they had already served the initial notice on April 02.

Moreover, IPPs will also serve a final notice for the recovery of another Rs4.0 billion in May. Ironically, the government instead of clearing such outstanding dues kept asking the IPPs to withdraw their notices.

Despite a number of meetings between the representatives of IPPs and Ministry of Water and Power along with Finance Division before submitting the final notice, the government was still nonchalant towards the financial woes of the IPPs, which are producing around 1650MWs to help the government curb energy crisis. “Since the government has constantly been ignoring the implications of possible sovereign default by not responding to the notices of IPPs, it is no wonder that the country’s energy crisis will deepen further once they shut down their units,” director of an IPP said. It may be noted here that last year on May 13 total four IPPs served notices to the government on non-payment of Rs16.43 billion.

This year, both the number of IPPs and dues got doubled owing to the indifference of the government towards country’s energy issues. As the government of Pakistan was the sovereign guarantor, the IPPs after exhausting all legal avenues including serving notices to Pepco, invoked the guarantee.

The non-compliance on these notices, it must be noted, would be the first step towards sovereign default on the part of the government.

“This will also create ample hurdles for the government to invite new IPPs in the country in near future. Besides, the country’s rating would nose down and no foreign bank would entertain Pakistan’s letter of credits, which will take hefty toll on the country’s exports,” he said.

In total, the government has to pay Rs113 billion to 18 IPPs that include Hubco, Kapco, Attock Gem, Liberty Power, UCH, Nishat Power, Atlas Power, Nishat Chunian, Liber Power Tech, AES Pakgen, Rousch, AES Lalpir, Saif Power, Saphire Power, Fauji Kabir, Orient, KEL, and Halmore.

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