ISLAMABAD: Nine independent power producers (IPPs) decided on Thursday to withdraw notices they had served for calling Pakistan’s sovereign guarantee for non-payment of dues after reaching an agreement with a government team about resumption of full payments for daily power supplies and clearance of Rs8.5 billion arrears this month.

The agreement was reached after two days of talks as the deadline for encashment of the guarantee came nearer and there were apprehensions about increased electricity shortage because of inability of the IPPs to procure fuel in the absence of daily payments by the Central Power Purchasing Agency (CPPA).

Water and Power Minister Syed Naveed Qamar led the government’s team which included members of the Power Purchaser and Private Power and Infrastructure Board (PPIB).

Chairman of IPPs’ advisory council (IPPAC) Abdullah Yousaf told Dawn that the government had agreed to resume daily payments from Thursday.

In addition, the government side would clear the Rs8.5 billion arrears before Sept 29 to enable the IPPs to service their bank loans.

The government side also agreed to clear all outstanding dues by Oct 15, he said. He appreciated the role played by the federal minister for resolving the issue in an amicable manner.

The nine IPPs—Atlas Power, Attock Gen, Halmore Power, Liberty Power Tech, Nishat Chunian, Nishat Power, Orient Power, Saif Power and Sapphire Electric Company—had served notices to the power purchaser and the government to call sovereign guarantees because the outstanding dues of about Rs45 billion had not been cleared.A spokesman of the ministry of water and power confirmed that the agreement had been reached and the IPPs would be able to service their debts to lenders before Sept 30.

Besides resumption of normal daily payments, the IPPs, set up under the 2002 power policy will get the entire capacity payments on or before Sept 29.

As a result, he said, the nine IPPs would withdraw the notices they had served on the power purchaser and the power purchase agreements would remain intact.

On or before Oct 15, he said, the government would pay or procure the payment of all remaining amounts of the outstanding amount, less amounts paid until Oct 14.

Under IPPs notices, the government had been given 30 days until Sept 25 to pay about Rs31 billion and another Rs14 billion by next month to avoid encashment of its sovereign guarantees.

Reacting to the notices, the CPPA had stopped on Sept 6 even normal daily payments to the IPPs.