Welcome to official website of PRES

Supply of 1,800MW to stop if IPPs not paid by 29th

In a worrying development, the cash-strapped Independent Power Producers (IPPs) have, after a lapse of 30 days of their notice period to CPPA (central power purchase agency) against the default of Rs42 billion, served the final 10-day notice to the government seeking encashment of sovereign guarantees. The IPPs have warned that if their dues were not cleared within the stipulated period, about 1,800MW of power supply to the system would discontinue by April 29.

In case of encashment of sovereign guarantees that the government had extended to the IPPs, the credit rating of the country in terms of investment would be adversely affected at the international level and no investment would land in the country anymore from abroad as Pakistan would be declared a most high-risk country.

In the wake of further shortage of 1,800MW electricity supply in the system, the 14-20 hour long blackouts would increase.

This time, eight IPPs have issued their final notices to the government for a 10 day period and warned that there was no positive response from the government and it will be left with no option but to pay back sovereign guarantees to IPPs.

According to Abdullah Yousaf, Chairman of IPPs Advisory Council, the government is bound to pay the cost of electricity as it has extended sovereign guarantees to the IPPs to this effect. If the government fails to pay the dues by April 28, then the power plants would be handed over to the government and in return it would have to pay the cost of the power plants with profits.

The financial position of IPPs has alarmingly deteriorated and they have no liquidity even to pay to their employees and purchase furnace oil to run the plants. However, senior officials of the Ministry of Water and Power not wanting to be named said that the Central Power Purchase Agency (CPPA) owes IPPs Rs35 billion and the Ministry had offered to pay the IPPs in a phased manner, but later could not stick to its proposed mode of payment.

Yousaf said the government has also reduced Normal Daily Payments to IPPs owing to which it is not possible to run the plants any more.

β€œIn the wake of acute financial constraints, all the IPPs are running below 50 percent of their capacity.” He said that the arrears of all 28 IPPs have, however, swelled to over Rs330 billion.

Comments are closed.