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Power generation by 8 IPPs declines 60pc on lack of funds

Eight independent power producers (IPPs) with combined generation capacity of 1700 megawatt are producing only 700 megawatt as the ministry of water and power is sitting on Rs18 billion provided by the ministry of finance to make part payment against over Rs50 billion sovereign defaults.

Sources said that the ministry of water and power after putting the government on sovereign default took the case to the Economic Coordination Committee (ECC) of the Cabinet for immediate payment of Rs18.54 billion and guideline to NEPRA for enhancement of working capital limit.

Unfortunately due to inefficiency of the ministry none of these three decisions has been implemented so far, they added.

Power sector experts regret that most efficient IPPs of the country were being deprived of even fuel at a time when the country was facing its worst-ever power crisis.

They said that these IPPs could produce additional 1000 megawatt power from the same amount of fuel that was being wasted at state owned power stations to produce only 500 megawatt.

“These IPPs are 100 percent more efficient than state-owned plants,” an industry official said.

It is learnt that the ECC decided to generate Rs82 billion for the power sector to clear part dues of these eight IPPs and to clear Pakistan State Oil dues.

Sources in the ministry of water and power reveal that Rs18.54 billion approved in ECC meeting for the said eight IPPs can get released from finance ministry within no time and generation can be increased but some circles are reluctant to release the amount for unknown reasons.

“This government has defaulted on its sovereign guarantee,” said another industry official on the condition of anonymity. “Legally we are no more bound to supply electricity to the government unless it clears its default,” he said, adding that receivable from government of these 8 IPPs had crossed the figure of Rs50 billion.

“We do not want to drag our government in international courts as it would ruin the reputation of our country,” he said, adding that it was however not possible for any IPP to go on producing power without getting any payment.

“We are in default with our lenders due to non payment from the government, therefore, no scheduled bank is interested in further financing for purchase of fuel.”

He said that government first defaulted on a lump sump payment of Rs34 billion to the IPPs. Then, he added, it again defaulted on further amount of Rs9 billion after all notices and formalities were completed.

The notices for 3.5 million defaults by the government have also lapsed. Further another default amounting to Rupees 12.5 billion (relating to 8 IPPs) is about to reach on June 2. He regretted that the government was taking all these defaults lightly. This had effectively barred the foreign investors from committing their resources in Pakistan.

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