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“Circular debt piling up again in power sector”

ISLAMABAD: On February 15, 2017, the total overdue amounts to the power sector, including GENCOs stood at PKR 414 billion In a statement issued by the Independent Power Producers Advisory Council (IPPAC), approximately PKR 160 billion out of this relates to overdue payments from CPPA-G owed to GENCOs and NTDC while the balance is for...

SAMAA | - Posted: Mar 3, 2017 | Last Updated: 4 years ago
SAMAA |
Posted: Mar 3, 2017 | Last Updated: 4 years ago
“Circular debt piling up again in power sector”

General view of the K-Electric's Power Plant located in Bin Qasim on the outskirts of Karachi, Pakistan, August 11, 2016. -Reuters

ISLAMABAD: On February 15, 2017, the total overdue amounts to the power sector, including GENCOs stood at PKR 414 billion

In a statement issued by the Independent Power Producers Advisory Council (IPPAC), approximately PKR 160 billion out of this relates to overdue payments from CPPA-G owed to GENCOs and NTDC while the balance is for IPPs. Payments owed to WAPDA for hydel generation are in addition to this. This is despite the oil prices having dropped by more than 50% over the last three years; and this number is steadily rising.

These are amounts verified and audited by the relevant departments for electricity already supplied to the system, and are past the payment due dates.

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, all 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. Left with no choice, the IPPAC Members have today 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 MoWP 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.,” the IPPC said.

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.   – SAMAA

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