Four major IPPs seek urgent payment of dues

Four major independent power producers (IPPs) have demanded urgent payment of their outstanding dues from the power purchasers, as promised by the government through sovereign guarantee. In separate letters to the government of Pakistan, these IPPs, including Nishat Chunian Power, Nishat Power, Liberty Power and Atlas Power, said that National Transmission and Despatch Company has failed to make payment to these IPPs as required from it under the Power Purchase Agreement (PPA).
The letters have been addressed to the government of Pakistan, which is the guarantor in the PPA between power producers and purchasers, through Private Power and Infrastructure Board. They asked the government to fulfil its commitment regarding payment of dues, amounting to billions of rupees, within 30 days (out of which 10 days have already passed), failing which they would have to issue a final notice, which would mean a point of no return.
The major IPPs seem to have surrendered before the worsening situation of the country in all means as their survival is in great danger and they have invoked the sovereign guarantee. The statistics show that total outstanding dues of all IPPs have mounted to Rs 121.793 billion, as on May 13, 2011, and Nishat Chunian Power is waiting for the highest dues of Rs 4.628 billion to be cleared in its favour whereas Nishat Power waits for Rs 4.5 billion, Liberty Power Rs 3.719 billion and Atlas Power dues reach up-to Rs 3.583 billion.
The government has long been overlooking the worries of independent power sector of the country. Now the IPPs have been left with no choice but to demand sovereign guarantee. Pepco owed Rs 121 billion to the IPPs on May 13, 2011. Some IPPs are in a position to wait for actual payment as they are assured of fuel supply by the PSO or gas utilities on the instructions of the government. However, many newly set up IPPs do not enjoy this facility under the agreement they signed after 2002.
Discrimination worth noting in this regard is that IPPs established in 1990s are given monthly capacity charges and besides assured uninterrupted fuel supplies. The IPPs established under power policy of 2002 are not given any capacity charges and are required to purchase fuel from their own resources. They receive payment in accordance with the power supplied. If they have no resources to buy fuel because of payment held by power purchaser they are denied any compensation. In fact, they might even be subjected to penalties for non-supply of power.
It was with this background that these four IPPs resorted to the last option left with them that is to give a notice to the government of Pakistan to fulfil its obligation as guarantor of the sanctity of agreement between Pepco and them. The four companies, Nishat Power, Nishat Chunian, Liberty Power and Altas Power have finally issued notice to the government reminding it of its sovereign guarantee for smooth running of power purchase agreements.
The notices were given about 10 days back through Private Power Infrastructure Board for clearance of dues of these companies amounting to over Rs 15.75 billion. Each company has issued separate notice of 30 days in this regard that is in line with their power purchase agreement.