ISLAMABAD: M/s Hub Power Company (Hubco) has once again raised the issue of acute shortage of RFO in the country and the immediate need to settle overdue receivables to ensure uninterrupted availability of its plants for despatch.
CEO, Hubco Kamran Kamal, in a letter to Power Division has stated that Hub Plant is being continuously despatched and therefore RFO stock at the plant needs to be replenished on a continuous basis to ensure the plant continues to meet the despatch without interruption. However, PSO has only supplied 5,000 tons of fuel in the last three months as a result the fuel stock at the Plant has depleted from around 47,000 tons to around 13,000 tons.
“Unless fuel supply is resumed immediately, the plant will run out of fuel in a few days, resulting in complete shutdown.
This is also important keeping in view the upcoming Eid holidays,” he added. There has been a significant surge of around 40% in RFO prices (Rs 184,150 per ton as per latest price notification) which has also significantly increased the working capital requirements of the plant. On the other hand, the daily payments have remained very low and the Company’s overdue receivables have increased to more than Rs 59 billion causing severe liquidity issues for the company, he continued.
Hubco has sought urgent intervention of Power Division’s top brass for immediate settlement of its overdue receivables to enable the company to procure fuel and meet other operational and financial commitments to ensure uninterrupted availability of the plant for despatch.
CEO Hubco has also requested that directions be issued to concerned offices for urgent steps to alleviate the ongoing fuel shortage in the country, adding that the company reserves its right under the various concessions, Power Purchase Agreements (PPA) and Implementation Agreements (IA) for all the consequential losses due to CPPA-G’s default in payments.
On April 7, CEO Hubco, in his letter stated that despite repeated requests, the daily allocation of payments to Hub and Narowal plants remain very low, causing severe liquidity issues for the company and has constrained its ability to procure RFO and run its day-to-day operations and on the other hand, the countrywide shortage has made the procurement even more challenging and fuel suppliers are demanding advance payment.
He maintained that the situation has attained such severity that unless immediate steps are not taken for release of overdue receivables and alleviate the ongoing fuel shortage in the country Hubco’s plants will run out of fuel in a few days.
“We reiterate that the daily payments do not even cover the cost of fuel being utilized for power generation whereas, in addition to replenishment of fuel stock, we also require funds to meet our operating and financial expenses, he said, highlighting that the Group’s overdue receivables from CPPAG currently stood at over Rs 81 billion.
On April 1, 2022, the company, in its letter had requested Power Division to settle its over-dues.
Copyright Business Recorder, 2022