ISLAMABAD, May 9: With the electricity shortfall touching about 7,000MW on Wednesday, the government decided to immediately release Rs23 billion to power companies and fuel suppliers and to raise another Rs70 billion through term finance certificates (TFCs) within a week in an effort to ease power crisis.
According to a senior government official, the decision had been also conveyed to independent power producers (IPPs) who had given a deadline of May 10 to clear the dues or face legal proceedings leading to encashment of government guarantees.
The IPPs are reported to have agreed to postpone legal proceedings. An official said the breakthrough was achieved in a meeting presided over by President Asif Ali Zardari on Wednesday that was attended by ministers and seniors officials of the water and power, petroleum and finance ministries.
On Monday, a group of nine IPPs had announced that they had completed the contractual requirement to issue a 30-day notice for encashment of government guarantees for overdue receivables of about Rs42 billion. After the expiry of the notice period, they issued a 10-day final notice of default which expired on Monday.
The IPPs said that the government had technically committed a sovereign default and gave a 72-hour ultimatum before formally announcing the default and claiming encashment of government guarantees. However, before the expiry of the ultimatum the government persuaded them to put on hold the extreme step to enable it to arrange finances.
Accordingly, a special meeting of the Economic Coordination Committee (ECC) has been convened on May 15 to approve a debt-swap arrangement under which the government will issue Rs70 billion worth of TFCs to provide Rs18 billion to IPPs and remaining 62 billion to Pakistan State Oil and other fuel suppliers to ease fuel shortage.
But before that, an amount of Rs23 billion would be released to the Pakistan State Oil and some of the IPPs to solve their immediate problems. The official said that on the directives of the president fuel supplies to Hubco and Kapco would be resumed by the PSO later this week for which it would be provided an emergency payment of Rs5 billion.
Simultaneously, the gas supply from Sawan gas field facing technical difficulties, will also resume on Thursday that will re-energize four IPPs of about 1200MW generation capacity currently under forced shutdown because of fuel shortages.
A senior official said the wide gap between electricity generation and demand had become so wide that the power system was “currently on forced shutdown mode” under which the planned load management had become impossible and the field staff had to take immediate decisions for emergency cuts to protect the system.
The official said the situation would start to come under control from Friday onwards as gas supplies and furnace oil supplies improve.
It was only after President Zardari’s meeting with energy related ministers that Syed Naveed Qamar assured the delegation of power loom owners to reduce loadshedding in Faisalabad by an hour with an increased power supply of about 60MW for the city to minimise the impact of energy shortfall on small businesses and textile sector.
The reduction will come into effect on Saturday after improvement in generation. The Faisalabad loom industry was assured that the duration of loadshedding would come down to three hours from four and apply to all the industry dominated feeders.
The delegation comprised Faisalabad Powerloom Association, Textile Exporters Association, Hosiery Manufacturers Association, Embroidery Association and Faisalabad Chambers of Commerce and Industry (FCCI).