ISLAMABAD: China Power Hub Generation Company (Pvt) Ltd (CPHGC) has again knocked on the doors of CPPA-G and SAMP on CPEC, Khalid Mansoor, for payment of overdue amount of Rs 37 billion, official sources told Business Recorder.
The CPHGC is a 1320MW CPEC coal-fired power project.
The company’s CEO, in a letter to CEO CPPA-G, has explained that the company wrote several letters to the Ministry/ concerned authorities relating to long outstanding overdue receivables and piling-up of coal inventory for monsoon season.
According to the power company, CPEC projects have supported the GoP by providing cost-effective energy solutions to the country, but the outstanding receivables have remained a significant concern for all CPEC energy projects.
The outstanding receivables of CPHGC stood at Rs 55.362 billion as of February 25, 2022 out of which Rs 37.231 billion is overdue.
The company has highlighted that a significant amount of billing is currently pending due to the delay in the decision of the one-time tariff adjustments at Commercial Operation Date (COD) by NEPRA.
The Company in several correspondence and meetings with the relevant officials raised its liquidity concerns; however, no significant improvement has been witnessed in this regard.
The company in its letter has claimed that recoveries amounting to only Rs6.30 billion have been allocated by CPPA-G in the month of February, 2022 (till February 25, 2022) and owing to this slow trend of recoveries the Company is unable to meet its operational requirements for coal procurement.
CPHGC had already shared at various times detailed fuel procurement plan and subsequent fund requirements with CPPA-G, besides approaching National Power Construction Corporation (NPCC) multiple times to highlight the challenges it has been facing in the management of coal inventory in monsoon season (April- September 2022).
In this regard, CPHGC requested NPCC to allow the company to shift schedule outages in monsoon months so that despite the limited tariff recovery from CPPA-G under the unprecedented global fuel price challenges, CPHGC can manage stable and reliable dispatch during the monsoon period.
In this regard, CPHGC shared its willingness to reschedule these outages in any month from April to September, 2022. However, NPCC has not entertained the company’s request and mentioned that keeping in view the annual power generation plan, they cannot allow schedule outages from April to August, 2022.
According to the company, current coal stock inventory at CPHGC is 671,565 tons and keeping in view the daily average consumption of 11,000 tons, CPHGC can only operate both units with existing inventory till mid of April, 2022; whereas, in order to operate both units of CPHGC till the already approved schedule outage period of September 1, 2022 CPHGC would need to procure additional 1,518,000 tons of coal. This additional coal needs to reach CPHGC site before April 30, 2022 so that there is no coal supply interruption to CPHGC complex during the monsoon season. Assuming the average CFR+ duties of coal at $ 315.46/Ton (coal rate as of 25th February, 2022), further requirement of funds for procuring 1,518,000 tons of coal will be $478.868 million.
Therefore, keeping in view, the current situation, the company has again requested to issue tariff recovery to CPHGC before March 15, 2022 against the additional coal requirement during the monsoon months; otherwise, it will not be possible for CPHGC to keep both units operational during the monsoon period.
Moreover, the working capital lines of the Company have already been fully exhausted due to different reasons while payments of fuel suppliers and contractors are still pending.
The company has sought SAPM on CPEC for a resolution of the situation through allocation of maximum funds to CPHGC in order to provide uninterrupted power supply to national grid and to avoid contractual defaults.
Copyright Business Recorder, 2022