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Govt cancels meeting with IPPs at the eleventh hour

Updated Mar 18, 2017 10:02am


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LAHORE: The talks between the government and the Independent Power Producers Advisory Council (IPPAC) on unpaid bills of 13 private power producers, which have already called their sovereign guarantees of Rs48 billion, collapsed on Friday after the Ministry of Water and Power cancelled meeting with the council officials at the eleventh hour.

The ministry called off the meeting citing an advertisement published by the private producers in the newspapers on Thursday to announce that they had extended the deadline for calling the sovereign guarantees by 10 days till March 26 to allow the government to settle the issue of payment of their unpaid bills – commonly known as circular debt.

The power companies had been invited for a meeting by the Private Power Infrastructure Board (PPIB) last week after they issued final notice for calling sovereign guarantees on March 2.

The government had sought two days from the private power producers for another meeting to find resolution to the various pending issues including the payment of unpaid bills to avert a sovereign default. The second meeting was scheduled for yesterday (Friday) in Islamabad but was cancelled late on Thursday night.

“The ministry wrongly believes that our media campaign is aimed to damage the country’s reputation. But we had started to take out advertisements because the ministry high-ups were not listening to us,” contended chief executive officer of a power producer while speaking to Dawn.

“We extended the payment deadline for 10 days as a goodwill gesture after we were assured that a solution would be found at the next meeting. We gave the government time to arrange the money for making our payment. But it had instead called off talks.”

The IPPs had called sovereign guarantees after the failure of the National Transmission and Despatch Company (NTDC) and the government to pay the overdue amount even after the passing of 30 days. The government, under the sovereign guarantee, has to pay the due amount within 10 days from the date of submission of final notice.

The producers that have served final notices include: Lal Pir Power (Rs4.552bn), Pakgen Power (Rs7.778bn), Kohinoor Energy (Rs2.306bn), Liberty Power (Rs5.361bn), Nishat Power (Rs4.881bn), Attock Gen Ltd (Rs4.449bn), Atlas Power (Rs4.555bn), Nishat Chunian Power (Rs4.16bn), Hubco Narowal (Rs5.024bn), Saif Power (Rs1.503bn), Sapphire Electric (Rs1.396bn), Orient Power (Rs1.18bn) and Halmore Power GCL (Rs880mn).

This is the fourth time that the IPPs have initiated process to invoke their sovereign guarantees for the recovery of their unpaid bills.

According to the IPPAC, the unpaid bills of the power sector, including GENCOs, had soared to Rs414bn by mid February in little over three and a half years since the government cleared the previous stock of Rs480bn in June 2013.

The IPPs want the government to come up with an acceptable plan for clearing their bills and bind the NTDC and CPPA to stop violating their contractual provisions.

Published in Dawn, March 18th, 2017


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Comments (11) Closed

Athar sherwani Mar 18, 2017 10:54am

It shows government's complete failure in housekeeping. I fear that when new IPP's capacity becomes available in near future then matters will get even worse, especially after the next elections in 2018.

Fudayl Z. ahmad Mar 18, 2017 12:18pm

It is time, the Government took notice of NEPRA's under-calculations of consumer tariff and bring it in the public domain that why does the circular debt accumulate, in the first place. The discerning public should know who is the prime beneficiary of this circular debt and who is ultimately going to pay this bill.

M.Saeed Mar 18, 2017 01:53pm

These IPPs are the main reason of our power travails. They must be made to pack and go for good.

Majid Mar 18, 2017 02:10pm

The whole problem starts with world bank/imf dictats of privatization and subsequent knowledge that these IPPs will be protected regardless of the risks. While the inept govt fails to plan, regulate and maintain it's own house. Largest defaulters of electricity are govt institutions, army and police. It's high time the while system is ripped up and thrown in the dustbin of history. We need better people in govt and a new system of govt.

mustafa Mar 18, 2017 03:07pm

how many of these plants have been audited, i rememeber one objection to the previous payment was most plants had not been audited and were making returns higher tha allowed

AHA Mar 18, 2017 06:08pm

Let us outsource complete power generation to China

Athar sherwani Mar 18, 2017 06:33pm

@M.Saeed The problem is not IPP but the distribution companies which are prone to corruption and huge line losses due to kunda culture and inefficient transmission. Matters get worse as governments in centre & provinces are not paying their bills. Current situation is exact replica of previous government's circular debt.

ZOOKH Mar 18, 2017 07:52pm

@AHA Let us outsource everything to China.

Adil JAdoon Mar 19, 2017 07:46am

@M.Saeed You don't have to buy from them????? who is forcing the govt to do so. WHY IS THE GOVT. SUBSIDIZING BIG INDUSTRY AT THE COST OF INDIRECT TAXATION OF COMMON MAN? Let everyone pay for the power they use and punish thieves severely, but then all our parliamentarians will be in jail!

abdullah Mar 19, 2017 08:27am

Whennpeople dont pay there bills so how will the companies be paid cash.govt cant force people to pay because of political parties and secondly its the kunda issue which cant be fixed.electricity robbed this way will be payed by govt our the honest bill payers.

aminapk Mar 19, 2017 08:50am

Govt should take over all assets . IPPs have not delivered as they promised. May start Joint Venture companies with chinese firms. They know how to produce power. They are already working in Karachi by taking on Local electic utility. IPPs are blackmailing nation. Extraorninary problems created by blackmailers should be taught lesson and stop blackmailing permanently.