The Hub Power Company''s (Hubco) receivables against the Water and Power Development Authority (Wapda) have exceeded Rs 90 billion attributed to the inter circular debt.
"At present an amount of Rs 90.18 billion is outstanding payable to Hubco by Wapda of which Rs 83.39 billion is overdue and payable immediately. This has severely impacted on our cash flows resulting in our inability to pay PSO and our other business partners in a timely manner," Chief Financial Officer Hubco wrote in a letter to Rana Muhammad Amjad, General Manager (WPPO).
The power company argues that in order to continue supplying electricity, it needs a constant supply of RFO to pay other vendors on timely basis. "Due to the increasing trend in the outstanding amounts from Wapda Hubco has been unable to make payments to the fuel supplier and at present owes an amount of Rs 78.08 billion to PSO of which Rs 73.41 billion is classified as overdue and must be paid immediately," Hubco CFO added.
According to reports, the public sector Pakistan State Oil (PSO) is demanding urgent payment and stopped oil supply twice during the past two weeks. "In addition Wapda is in default because it has not yet provided us the Standby Letter of Credit (SLC) for the revised amount of Rs 8.876 billion that was due to be delivered to the company by May 31, 2010 in respect of the financial year, 2010 to June 30, 2011 in accordance with the requirements of our PPA," the letter further notes
Hubco has requested General Manager WPPO to intervene personally to settle the amounts due to Hubco so that the company can settle its obligations to PSO and secure uninterrupted fuel procurement and keep supplying electricity to the national grid.
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