LAHORE: The independent power producers (IPPs) say they are facing problems in servicing their loans and continuing power production operations owing to liquidity crunch caused by the government’s failure to pay them their outstanding bills that reached Rs230.5 billion on Sept 3.

The bills do not include the overdue amounts of Saba Power, Foundation Power and New Bong Hydropower.

In a letter to Finance Minister Ishaq Dar, 22 major IPPs have urged him to rescue them and save the units from total collapse.

It reads the power producers had “exhausted all their resources to keep current with their bank loan that has disadvantaged their shareholders”.

It says the working capital loans are serviced from the companies’ shareholders’ pocket, adding the IPPs do not need working capital if the payments are made according to the schedule agreed upon in the power purchase agreement.

The companies have regretted that even the capacity payments had been withheld, which were needed to service the long and short-term project loans, make insurance payments and pay staff salaries. The cumulative amount of CPP, the letter reveals, had reached Rs54.138 billion. Of this amount Rs27.945 billion are overdue for more than 90 days.

Similarly, it says that a huge amount of Rs50.6 billion has accumulated as interest because of long delays in the payment of power purchased by the IPPs. Out of the total outstanding bills, the bulk amount of Rs131.308 is due to Hubco and Kapco.

The 22 IPPs that signed the letter include Hubco, Kapco, AES Lalpir, AES Pakgen, KEL, Liberty (gas), UCH, Rouch, Fauji, Habibullah, AGL Power, HUBCO Narowal, Atlas Power, Nishat Power, Nishat Chunian, Liberty Tech, Orient Power, Saif Power, Sapphire Power, Halmore Power, Uch II Power, and Engro Power.

Published in Dawn, September 14th, 2014