ISLAMABAD: Independent Power Producers' (IPPs') issue is likely to land in the Federal Cabinet on Tuesday (today), well-informed sources told Business Recorder.
On April 7, 2021, Power Division placed the issue of pending due payments to IPPs before the Economic Coordination Committee (ECC) of the Cabinet. The Committee after a brief discussion deferred consideration of the proposal of summary titled "NAB investigation and information requirement regarding MoUs/ Agreements and final negotiations between IPPs and GoP".
The minutes of the ECC meeting held on April 7, 2021 are also on the agenda. The issue of IPPs' payments is also in the minutes as item 9 of the ECC.
The sources said when the minutes will be presented for ratification, then the IPPs payment issue and NAB investigation will come under discussion.
The sources said the Finance Ministry has also expressed willingness to pay 40 per cent of agreed amount to the IPPs.
"The first instalment of 40 per cent duly divided in cash, PIBs and Sukuk to be paid to the concerned IPPs shall be adjusted against power sector subsidy claims for the FY 2019-20 and 2020-21. Similarly, disbursement of the remaining 60 per cent will be taken care of in the next financial year," the sources quoted the Finance Ministry as conveying to Power Division.
The government had to pay 40 per cent of Rs 404 billion to the IPPs by March 29, 2021 but nothing has been disbursed by the Power Division so far, on the plea that since the matter is with the NAB, no official is ready to take the risk of 90 days' confinement without any bail, the sources added.
There is a lot of discussion on payment of Rs 180 billion to the IPPs out of Rs 404 billion but no concrete movement has been witnessed so far.
Finance Division, sources said, has asked Power Division to approach the ECC of the Cabinet for seeking supplementary grant/ technical supplementary grant by submitting details of the exact amount first instalment to be paid to each concerned IPP in cash as well as through instruments on account of outstanding subsidy claims of FY 2019-20 and 2020-21 under Power Division's demand for CFY 2020-21 so that payment may be released to IPPs through CPPA-G in accordance with the approved payment mechanism.
Prime Minister Special Assistant on Power and Petroleum Tabish Gauhar will give a presentation on the circular debt to the Cabinet on April 20 (today) as many issues are still creating confusion among the Cabinet members which also include increase in power tariff by Rs 4-5 per unit.
IPPs say it is an " extremely sad state of affairs as we are fast moving towards default due to nonpayment of huge overdue and extremely meagre routine payments by CPPA-G."
Those IPPs which gave concessions to government in the larger national interest feel that they have made a huge mistake by trusting Government of Pakistan. Now, they are not only deprived of the payment agreed but also are not getting normal payments except very small amounts which exposes them to a serious financial crunch potentially leading to default and plant shutdown in the hot summer months.
"Any defaults by IPPs will have severe repercussions for the under construction CPEC projects and will also further exacerbate the negative sentiments of international investors," said one of the representatives of IPPs.
At a recent of Federal Cabinet, Minister for Planning, Development and Special Initiatives, Asad Umar, who is also Chairman of Cabinet Committee on Energy (CCoE), expressed concern over the slow pace of things at the Ministry of Energy. More often than not, it was the CCOE, which forced Power and Petroleum Division to push matters, he said. The Special Assistant to the Prime Minister on Power and Petroleum noted that due consultations with stakeholders had to be done and position firmed up before taking it to CCOE. He offered to make a presentation to the Cabinet on Circular Debt Management Plan (CDPM) in the next meeting (today).
Copyright Business Recorder, 2021