ISLAMABAD: The management of 1,320MW Port Qasim coal-fired power project has sought help from Chinese Embassy for payment of due amount of Rs80 billion.
CEO, Port Qasim Electric Power Company (Private) Limited (PQEPC), Guo Guangling, in his letter has explained that under the guidance of the Government of Pakistan, the 1,320MW Port Qasim Coal-fired Power Project, acting as a leading energy project under China-Pakistan Economic Corridor (CPEC), has continuously provided the most clean, reliable and economical electricity to the national grid, and “endeavoured our efforts in controlling the circular debt throughout the outbreak of Covid-19 pandemic.”
He further appreciated the efforts of the GoP and the Central Power Purchasing Agency-Guaranteed (CPPA-G) on arranging funds and making electricity tariff payment to IPPs, however, the total payment due amount of the project has reached to Rs80 billion ($446 million) by April 14, 2022, with a delay payment period of over five months and could further escalate due to surge of international coal price.
According to the CEO, the current due amount has entitled PQEPC to proceed to suspend the plant operation according to PPA Section 9.10 without any Liquidated Damages (LDs).
“PQEPC has low tariff advantages, lose-lose situation will occur if suspension is triggered. Therefore, timely settlement of due amount of the project is imminently required to ensure the sustainable power generation and to avoid constitution of loan agreement default and GoP sovereignty guarantee default,” he added.
CEO has maintained that such high overdue amount caused adverse impact to PQEPC operation, including: (i) CPPA-G payment is far less than the minimum fundamental cost, huge shortfall and loss is constantly being borne by PQEPC; (ii) huge loss due to PKR devaluation; (iii) coal supply interruption risk; and (iv) extra working capital pressure due to international coal price increase.
He further drew the attention of Chinese Embassy to the critical situation of payment delay confronting the PQEPC, requesting it for coordination with relevant authorities to provide financial support to CPPA-G, enabling them to pay off the outstanding amount as early as possible.
Guangling further stated that Revolving Account is endorsed by the Bilateral Agreement on CPEC Energy Project Cooperation, IA Supplementary Agreement, therefore, the immediate establishment and cash-flow injection into revolving account will support PQEPC to reduce its financial pressure.
Copyright Business Recorder, 2022