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Punjab IPPs’ financial woes coincide with power outages

The financial woes of eight Punjab-based independent power producers coincide with the power starvation of the consumers in the province where the power theft and bill default is the minimum. However, the domestic load shedding ranges from 12 to 16 hours a day.

Power sector experts hope that the caretaker government will act prudently and give priority to improving efficiency of the sector by operating those IPPs and public sector power houses that produce power at lower price instead of letting the bureaucracy act on its whims and allocate resources to power companies producing electricity at very high price.

“It is indeed a clear violation of rule to allow high cost power generation when low cost power generation capacity is available,” said Ghalib Atta, a power sector player. He said the Pakistan Electric Power Company (Private) Limited (Pepco) circulates the priority list based on the power cost of each IPP every month. It is mandatory for the power purchaser to ensure that it gets power from the low cost power generation companies.

Atta said that all the furnace oil-based power generation companies qualify for producing full power under the priority list but are denied payments, while the most inefficient producers continue to get furnace oil on government guarantees.

“The payment to PSO is delayed but ultimately made for the oil supplied to the most inefficient plants.” he said, wondering why this policy is denied to the efficient plants. Compliance on priority list, he added, will save government at least Rs15 billion a month. Power sector expert Mohsin Syed said that ideally all the installed power generation capacity in the country should be operational. However, when there is a shortage of funds, the most cost effective plants should operate.

He said eight Punjab-based IPPs were dealt harshly by the government. He said these IPPs were forced to seek relief from the Supreme Court. The SC in August 2012 ordered the government to clear over Rs50 billion dues of these IPPs in quarterly installments. The court also instructed the government to remain update on current billings of these IPPs.

Sources in the Ministry of Water and Power said that from August 1, 2012 till March 27, 2013, these IPPs provided an amount of Rs121.85 billion for the power supplied to the National Transmission and Despatch Company.

They said the government by March 27, 2013 cleared dues worth Rs80.60 billion. The outstanding amount of these IPPs from current billing has reached to Rs41.25 billion. The outstanding amount of the previous dues that the SC ordered to pay on installments stands at Rs11.17 billion. The total outstanding amount of these IPPs as on March 27 was Rs52.42 billion. This is almost the same amount for which these IPPs went to the SC for relief.

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