ISLAMABAD: Power Division has sought a supplementary grant of Rs 182.475 billion to clear part of payment to power plants of PAEC, Wapda and National Power Parks Management Company (Pvt) Limited (NPPMCL) as per payment mechanism already approved for IPPs, well informed sources in Finance Division told Business Recorder.
On a summary submitted by the Power Division, the ECC of the Cabinet decided on July 16, 2021 to constitute a Committee under the chairmanship of SAPM on Finance and Revenue having representation of the Power Division, Economic Affairs Division (EAD) and Finance Division tasked to formulate recommendations for cash and non-cash settlement for payment to the IPPs and the Gencos at par with IPPs.
The committee in its meeting held on July 19, 2021 deliberated the matter and agreed that for Government-owned Power Plants (GPPs), the following payments will be processed initially to clear past liability amounting to Rs 444.5 billion as proposed in the summary for ECC on July 6, 2021:
(i) settlement/ clearance of Rs 72.834 billion PAEC payables as of November 30, 2020; and (ii) settlement/ clearance of Rs 62.731 billion Wapda payables to the extent of Net (NHP) as of Sept 30, 2021; Rs 230.01 billion was payable to Wapda as on November 30, 2020 and settlement/ clearance of Rs 46.9 billion NPPMCL payables as of November 30, 2020 for smooth privatization transaction.
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For remaining payment of Rs 262.035 billion (as of November 30, 2020) to Wapda and other GPPs, it was recommended that an exercise may be carried out for cash and non-cash settlement by Power Division, Finance Division and Economic Affairs Division.
Due to resignation of the SAPM on Finance and Revenue/ Chair of the Committee, no further meetings could be held. Meanwhile, Strategic Plans Division (SPD) through a letter of September 29, 2021 approached Power Division, saying that outstanding receivables have increased to Rs 138.76 billion (as of September 24, 2021) and lesser release of payments by CPPA-G may result in shutdown of nuclear power plants.
Privatization Commission has also highlighted that long outstanding receivables of NPPMCL may impact the sentiments of potential lenders; therefore, payables to NPPMCL may be settled on priority.
Power Division argued that in order to meet immediate requirements of GPPs, there is need for settlement of Rs 182.465 billion to PAEC, Wapda, and NPPMCL as per payment mechanism already approved by the Cabinet for IPPs.
After explaining prevalent situation, Power Division has submitted the following proposals: (i) supplementary grant for release of Rs 182.465 billion for payment to PAEC, Wapda and NPPMCL as per payment mechanism already approved for IPPs. This will translate into supplementary grant of Rs 72.986 billion during current financial year and allocation of Rs 109.475 billion in the next financial year; and (ii) for remaining payment of Rs 262.035 billion (as of November 30, 2020) to Wapda and other GPPs, an exercise may be carried out for cash and non-cash settlement by Power Division, Finance Division and Economic Affairs Division in consultation with relevant GPPs.
The proposal was shared with Finance Division, Ministry of Water Resources, and PPMCL for comments. Strategic Plans Division, NPPCML and Ministry of Water Resources have endorsed the draft proposal with observations. However, the Finance Division has stated that provision of additional budget of Rs 444.50 billion at this stage is difficult to arrange due to tight fiscal space, as well as, being under IME Program. The Finance Division has requested for rescheduling or reduction of the requisite amount and further suggested that payments may be considered in instalments during the next FY 2022-23 after provision of budgeted allocations.
Power Division maintained that Finance Division has missed the fact that the former has only proposed payments of Rs 182.465 billion as per payment mechanism which, if approved, translates into payment of Rs 72.986 billion for FY 2021-22 (against Rs 444.50 billion indicated by Finance Division).
The remaining payment would invariably be made during the next fiscal year for which budget allocation can be made in light of clearance of significant IPP outstanding payments during the current financial year.
Copyright Business Recorder, 2022
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