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June 6, 2020

Rs200b likely to be paid to 79 IPPs, Gencos to avert power crisis

Top Story

June 6, 2020

ISLAMABAD: The Power Division has fine tuned its plan to pay Rs200 billion generated through Sukuk bond-II to 79 independent power producers (IPPs) and public sector generation companies (Gencos), said an official document.

“However the authorities in the Power Division have decided not to pay some 25 IPPs which also include the two power plants that belong to sugar mills of Jahangir Tareen -- the eminent leader of the ruling party PTI who is currently under hot waters following the recently published forensic report of Inquiry Commission on sugar crisis headed by the DG FIA,” said the document.

The power plant owned by special assistant to PM on petroleum, which is mentioned in the report of power sector inquiry report already submitted to the prime minister, will be getting only just over 40 percent dues. “The authorities in the light of the recommendations of the government committee which is in talks with representatives of IPPs after the power sector audit report of committee headed by ex-chairman SECP Muhammad Ali will pay the remaining dues to IPPs after some deduction, a senior official told The News.

Out of 104 IPPs and Gencos, the amount from Rs50 million to up to Rs19 billion will be paid to 79 IPPs. The coal-based power plant at Port Qasim, which is installed under CPEC umbrella by joint ventures of Chinese and Qatari companies, is the one that will be paid the highest amount of Rs19 billion. These payments are being made on the pattern of payments to IPPs made in 2013 without pre-audit exercise. The federal government has decided to pay the dues to IPPs with a view to averting the electricity crisis for three months from June to August, 2020.

According to the official documents, power sector is facing worst liquidity crisis that has emerged because of massive reduction in recovery of electricity bills and huge dip in the demand of electricity across the country on account of COVID-19 pandemic. Electric power generation companies have no liquidity left with them enough to purchase furnace oil, RLNG and coal as fuel to generate electricity and if they are paid some dues, then the electricity crisis will hit the country at a time when the temperature was at higher side during the peak summer season. The top mandarins of the Power Division said that the power sector is hit hard by COVID-19 like other sectors and in the next three months circular debt will increase by 250 billion which will be another challenge for the government to tackle.

As per the documents, coal-based power house at Port Qasim will be paid Rs19 billion in next week and similarly, Central Power Generation Rs15 billion, China Power Generation Rs8.70 billion, Engro Power Group Rs10 billion, coal-based power house in Sahiwal Rs13 billion, Kot Addu Power Company (Kapco) Rs11.67 billion, Laraib Energy Rs1.9 billion, National Power Park Haveli Bahadur Shah Rs13 billion, NTDC Rs1 billion, Nishat Power Gen Rs2.80 billion, Orient Power Plant Rs1.40 billion, Chashma Nuclear Power Plant Rs13 billion, Quaid-i-Azam Thermal Bikki Rs12 billion, Rousch Power Rs1 billion, Star Hydro Rs3.25 billion, Hub Power Rs1.07 billion, TNB Liberty Rs1.64 billion and Sapphire Company Rs1.07 billion.

According to the officials, in the wake of freezing of power tariff since January 01, 2020 and huge reduction in recovery of electricity bills, the payment of capacity charges despite the closure of many power houses in September will emerge as the biggest challenge for the government. “The government committee is at present in talks with the IPPs and the authorities of a friendly country which invested in Pakistan's power sector a lot and so far Pakistan’s authorities have got positive indications from IPPs and friendly neighbouring countries to provide solace to 220 million countrymen. People of Pakistan will get sigh of relief once the agreements with IPPs are reviewed,” said the documents.