Rs50bn SG against CPEC IPPs’ dues: Power Division asked to submit fresh summary

ISLAMABAD: The Cabinet Division has reportedly asked Power Division to submit the summary afresh for grant of Rs 50 billion supplementary grant for payment to CPEC projects after seeking approval from the new Minister- in-Charge, well informed sources told Business Recorder.

Sharing the details, sources said, former Prime Minister held two meetings – on January 14 and January, 26 2022, prior to his visit to China. During discussion, the Power Division was directed to process the case for release of Rs. 100 billion to CPEC IPPs against their receivables.

A follow up meeting was held in the Finance Division (FD) under the then Federal Minister for Finance on February 02, 2022, wherein it was reiterated that the receivables by CPEC IPPs be cleared on priority and a case be placed before the ECC for release of the remaining Rs50 billion to the CPEC IPPs as they were under massive pressure due to increasing price of inputs, especially imported coal.

The sources said information has been sought from the CPPA-G, according to which Rs. 217.51 billion are payable against 12 CPEC IPPs as on February 24, 2022.

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On March 17, 2022, it was noted that in order to keep the power sector afloat and to fulfil the fuel requirements, power sector subsidy claims need to be released on urgent basis. For this, an additional Supplementary Grant (SG) of Rs50 billion was required to be released. And release of Rs50 billion as second tranche would help manage fuel supply of coal-based power plants, mainly CPEC projects.

Power Division submitted the following two proposals before the ECC: (i) release of Rs 100 billion as Supplementary Grant of which Rs.50 billion would be by way of SG under the head of Tariff Differential subsidy (TDS) and Rs.50 billion by way of SG as in the head investment in Discos; and (ii) allow CPPA-G management to negotiate with CPEC IPPs to accept the payment of Rs 50 billion in the form of Pakistan Investment Bonds and Sukuk based on the terms and conditions of currently available offers by the Ministry of Finance (Rs. 25 billion each).

Power sector is currently facing an unprecedented cash-flow constraint due to escalation in the global price of fuel, increasing capacity payments owing to induction of new capacity (especially under CPEC projects) and increasing consumer end tariff.

Power Division further argued that any further payment beyond the set order would not be possible without injection of cash flows by the Finance Division.

Copyright Business Recorder, 2022