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March 4, 2017

IPPs invoke sovereign guarantee for Rs48bln dues

 
March 4, 2017

LAHORE: At least 13 independent power producers (IPPs) have invoked government of Pakistan’s sovereign guarantees to recover outstanding dues of more than Rs48 billion by submitting the final notice through Private Power Infrastructure Board (PPIB), sources said on Friday.

They said notices were served on March 2, 2017 through PPIB after the failure of the National Transmission and Despatch Company (NTDC) and government in paying 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. The producers that have served final notices include; Lal Pir Power (Rs4.552 billion), Pakgen Power (Rs7.778 billion), Kohinoor Energy (2.306 billion), 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 (Rs880 million).

This is the fourth time that the IPPs have initiated process to revoke their sovereign guarantees for recovery of their pending payments. Now the government have ten days to pay off the said amount otherwise the IPPs will have the right to get sovereign guarantees encashed under their PPAs.

Sources said that the proceeding of the process of sovereign guarantee is likely to bring bad name to the country while it will potentially affect its credit rating internationally. “This unfortunate development would shatter the confidence of new investor,” a source said.

According to an estimate, the total pending payments to 57 IPPs and other power generation companies has reached to over Rs400 billion. “The failure to pay dues shows the inefficiency of the government towards the issue,” the source said.

Meanwhile, according to a statement of Independent Power Producers Advisory Council (IPPAC), repeated attempts have been made by “IPPAC and its members to meet the senior officials of the government to resolve the long outstanding, audited and verified, overdue amounts, as well as to address pending policy issues on taxes and outstanding dispute resolutions but to no avail.”

“In fact, in an arbitration process regarding illegally held back amount, the GOP Attorneys have taken the position that the IPPs should be exercising their legal right of calling GOP Guarantee when they are not paid, rather than going into dispute processes,” the statement said.

“Left with no choice, the IPPAC Members have submitted GOP Guarantee calls, under their contracts, for a portion of the overdue amounts.” The IPPAC feels that in this time of growing restoration of investor confidence in Pakistan, it is quite unfortunate that the Ministry of Water and Power has chosen not to address these issues.

“We hope that rather than going into a default, the GOP will engage with IPPAC to find resolution of these issues, before it starts affecting investor confidence in the sector, especially for the CPEC projects,” it added.

“IPPAC members wish to support the GOP in rebuilding Pakistan, and will find solutions to work with the GOP, provided the GOP engages in resolving the pending issues rather than ignoring them altogether.”

According to IPPAC, the total overdue amounts to the power sector, including GENCOs presently 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 is for IPPs,” it said. Payments owed to WAPDA for hydel generation are in addition to this. —Munawar Hasan