Finance Minister Ishaq Dar. — File Photo
ISLAMABAD, June 28: A last-minute dispute over court cases filed by nine independent power producers created a deadlock in payment of about Rs60 billion to them, but an agreement was finally reached with the IPPs on Friday night and the government directed banks to clear the entire amount of Rs260bn to all IPPs.
Finance Minister Ishaq Dar told Dawn that under the agreement the IPPs would withdraw their cases from the Supreme Court within five working days.
He said payments were being released to the IPPs and the banks had been instructed to remain open on Saturday to complete the transaction.
Informed sources said the government made payments of Rs200bn to 19 IPPs by Friday evening after they had signed a memorandum of understanding with it in accordance with a decision of the Economic Coordination Committee of the cabinet.
Under the MoU, the IPPs agreed to achieve their maximum generation capacity and provide 1500-1700MW to the national grid before Ramazan, four IPPs to convert to coal-based power generation within 18 months, extend credit period from 45 to 60 days and reduce interest rate on late payments by public sector power companies.
But when the government asked the remaining nine IPPs to withdraw their cases against it for non-payment of dues, they refused to oblige.
This was also confirmed by chairman of the IPPs advisory committee Abdullah Yousaf who said the payment of about Rs200bn had been made but there were some issues relating to disbursement of the remaining Rs60bn which were being sorted out.
After intensive negotiations between the government side led by the finance minister and representatives of the IPPs, an agreement was finally reached and they agreed to withdraw the court cases. In return, the government directed the banks to clear their dues until Friday midnight and keep their branches open on Saturday to complete the transaction.
Nine IPPs which had filed the cases for non-payment of Rs23bn are: Atlas Power, Attockgen, Halmore, Liberty Power, Nishat Chunian, Nishat Power, Orient, Saif and Saphhire. The issue of non-payment will now be resolved through the dispute resolution mechanism of arbitration as envisaged in the power purchase agreements.
These IPPs were set up under the 2002 power policy.
An official told Dawn that of the Rs326bn for partial settlement of circular debt, Rs260bn was being paid to the IPPs and the remaining Rs66bn to state-run entities like the Pakistan State Oil, Sui gas companies, Wapda’s generation companies and Pakistan Petroleum Limited through a combination of cash payments and government bonds.