Kapco warns Wapda to pay Rs 48,599 million urgently

Kot Adu Power Company Limited (Kapco) has warned the Water and Power Development Authority (Wapda) of serious consequences if the latter fails to meet its contractual obligations and arrange the payment of Rs 48,599 million on urgent basis. The payment will enable Kapco to clear the outstanding dues of the Pakistan State Oil (PSO).
PSO in its letter sent to Kapco on January 26, said "in order to ensure uninterrupted supplies to Kapco, outstanding payment amounting to Rs 28,645 million (overdue plus financial charges) should be made to PSO immediately failing which PSO will not be in a position to ensure uninterrupted supplies."
In its letter sent to Wapda on Thursday, a copy of which has been sent to Ministry of Petroleum, Kapco says "although the company makes its best efforts to support government of Pakistan (GoP)/Wapda in meeting the dispatch requirements to the national grid, however, if we do not receive the required amount at the earliest, we shall not be responsible for any untoward situation arising as a result of your failure to meet the contractual obligations".
The letter further says, "we are writing to you with extreme disappointment that despite our numerous requests, we have not received any significant payment from you in this month to meet our operational requirements including fuel".
Kapco authorities said that PSO was pressing hard for payment of its outstanding dues and had again warned to stop supplying fuel. "Stoppage of fuel supply can have devastating effects on the electricity generation of the country and can result in additional hours of load shedding," the letter adds.
"As of today, the Kapco payable to PSO stands at Rs 28,645 million and the receivables from Wapda as of today stand at an alarming level of Rs 50,779 million, out of this Rs 48,599 million is overdue," letter says.
During the month of January 2011, Kapco received Rs 1,265 million from Wapda. Furthermore, the running finance lines available to the company (Kapco) have been almost exhausted and it has very limited cash available to meet its contractual obligations. "Keeping in view the urgency and significance of the situation, we are in dire need of cash and we strongly request you to arrange the payment of Rs 48,599 million on urgent basis to enable us to meet our obligations and to ensure uninterrupted power supply to the national grid," the letter adds.