LAHORE, May 10: A group of eight independent power producers (IPPs), which had invoked sovereign guarantees for the recovery of their dues of Rs34 billion, have delayed ‘legal action’ till May 16 on the request of the government.

“In principle we have decided to accept the government’s request to defer legal action for recovering our dues for electricity purchased by it from us in Oct-Nov last year. The decision will be conveyed to the government through a letter on Friday (today),” the chief executive officer (CEO) of one of the eight IPPs told this reporter on Thursday.

The IPPs had warned the government to clear their dues for the electricity it had purchased from them in Oct-Nov last year or face legal action for defaulting on sovereign guarantee. The IPPs had put the government on a 72-hour notice but were requested to postpone the legal action hours before the expiry on the deadline on Thursday.

“The government has assured us that it was working on a solution to the problem that had led to sovereign default and the issue of our dues will be resolved at the Economic Coordination Council (ECC) meeting on May 15,” the CEO said.

“We have been assured that the government is evolving a mechanism to ensure capacity and debt servicing payments to be managed in a regular pattern to avoid any default in future. In addition to this, modalities for daily payment will be worked out in consultation with the stakeholders for a sustainable payment stream for capacity and energy parts,” the CEO said quoting the letter the IPPs had received from the government.

He said the Pakistan Electric Power Company (PEPCO) had also sent a letter to the IPPs on April 26 requesting them to allow more time to finalize the matter of payment defaults.

The group of the IPPs had served notices of default on March 19, April 03 and April 10.

The government has consistently committed defaults under the Power Purchase Agreements (PPAs) with the IPPs by failing to pay them their dues on time. Total receivables of the IPPs from the power purchaser have increased to an alarming level of Rs232 billion, according to the IPPs advisory council.