LAHORE: The Independent Power Producers (IPPs) have withdrawn the sovereign guarantee encashment notice following government assurance about streamlining payments, it was learnt on Friday.
The management of IPPs has not insisted on resolving the issues through arbitration or international court and taken this step of withdrawing notices ‘in the larger national interest’, said official sources. Sources informed that a meeting between secretary water and power and representatives of IPPs was held recently to settle various issues between the two parties, including the overdue verified and audited amounts payable in favour of IPPs under the Power Purchase Agreement.
The government has shown intention that it will settle the issues with the IPPs. Based on the said assurance, sources in Ministry of Water and Power said, the IPPs wanted to provide all possible support to the government in the larger national interest.
Accordingly, the source added, as a gesture of goodwill, the IPPs have withdrawn the guarantee demand without prejudice to their legal and contractual rights which were not waived. The formal withdrawal has been received by Private Power Infrastructure Board (PPIB), a source added.
It may be noted that as many as 13 IPPs of the country have invoked sovereign guarantees of government of Pakistan to recover unpaid overdue invoices of more than Rs48 billion (out of the total Rs414 billion outstanding rupees at that time) by submitting the final notice to the government through PPIB on March 2, 2017.
The IPPs that had served the final notices for sovereign guarantee included the IPPs established under the 1994 power policy - LalPir Power (Rs4.552 billion), Pakgen Power (Rs7.778 billion), and Kohinoor Energy (Rs2.306 billion); and those set up under the 2002 power policy - Liberty Power (Rs5.361 billion), Nishat Power (Rs4.881 billion), Attock Gen Ltd (Rs4.449 billion), Atlas Power (Rs4.555 billion), Nishat Chunian Power (Rs4.16 billion), Hubco Narowal (Rs5.024 billion), Saif Power (Rs1.503 billion), Sapphire Electric (Rs1.396 billion), Orient Power (Rs1.18 billion), and Halmore Power GCL (Rs 880 million).
They said notices were served through PPIB after the failure of the National Transmission and Despatch Company (NTDC) and government to pay the overdue amount even after passing of 30 days from the initial notice served before the final notice.
The government, under the sovereign guarantee, has to pay due amount within 10 days from the date of submission of final notice. Later, both parties were involved in negotiation over the issue, though the government was initially reluctant to address the demands of the IPPs.
It may be noted that the management of the IPPs revoked the sovereign guarantees on the fourth notice for recovery of their pending payments.
The failure of government in paying amount of various power sector entities had resulted in piling up of circular debt, claimed sources. As per estimate, by March 2017, the total overdue amounts to the power sector, including GENCOs stood at Rs414 billion.
Approximately Rs160 billion out of this relates to overdue payments from CPPA-G owed to GENCOs and NTDC while the balance was for IPPs in addition to payments owed to Wapda for hydropower generation.