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ISLAMABAD: Power Division has reportedly locked horns with Karachi-Electric (KE) on payment of outstanding liabilities as both parties are making contrary claims with respect to due amounts, well informed sources told Business Recorder.

The Power Division, in a new letter, has cited the reference of KE’s letter of April 7, 2022 wherein the latter regretted to discharge the outstanding liabilities of CPPA-G/ NTDC as they already had Tariff Differential Subsidies (TDS) receivables amounting to Rs. 320.825 billion towards the CPPA-G/ NTDC with a net receivable of Rs. 31.73 billion from the GoP as NTDCI/CPPA-G payables to CPPA-G stood at Rs. 289.098 billion by the end of February 2022. Therefore, K-Electric apprised that they are not obligated to make any further payments. However, K-Electric in another letter of March 10, 2022 claimed the government of Pakistan (GoP) receivables amounting to Rs. 315.2 billion by end of February 2022 showing a difference of Rs. 5.625 billion between its claims.

According to Power Division’s letter of April 25, 2022, contrary to the CPPA-G letter of April 18, 2022, the outstanding liabilities against the K-Electric have soared to Rs. 395.369billion as of April 18, 2022 and the cheque shared by K-Electric vide No. 0004439 maintained at HBL Plaza branch Karachi, amounting to Rs. 3.895 billion against “November 2021 settlement advice had not yet cleared to date. Further, K-Electric is also not making any subsequent payment against the additional supply from November 2021 to date and Rs. 61.690 billion has accumulated in this regard.

According to Power Division, it is a matter of great concern and alarm that K-Electric is not fulfilling its legal and financial obligations despite its firm commitments. Power Division argued that non-payment to the power generators will lead to an overall reduction in electricity generation, which may result in the disconnection of additional supply to K-Electric during the holy month of Ramadan and onward.

KE’s exclusivity will end next year: Nepra

Power Division has strongly advised KE to fulfil financial and legal commitments and clear its current and outstanding liabilities towards CPPA-G by April 30, 2022 enabling the National Grid to maintain its additional supply during the holy month of Ramadan and afterward.

KE, in its letter refused to make any further payment to the Federal Government against electricity being supplied from the National Grid, saying the power utility has net receivables of over Rs 31 billion; KE’s CEO in his letter to Secretary Power Syed Asif Hyder Shah on March 7, 2022,further stated that total Tariff Differential Subsidy (TDS) receivables stood at Rs 320.825 billion as of February 2022 whereas stock of its payables was Rs 289.098 billion, showing a net receivable amount of Rs 31.727 billion.

“As evident from figures, KE has a net receivable of Rs 31.73 billion and therefore, the power utility is not obligated to make any further payments,” CEO said adding that KE despite being in net receivable position, was paying the amount for additional supply (over and above 650 MW) as a temporary arrangement with the understanding that the Power Purchase Agency Agreement (PPAA), Interconnection Agreement (ICA) and the TDS Agreement will be finalized and executed at the earliest in order to streamline the process for future,” CEO K Electric responded.

CEO further argued that despite the lapse of almost 10-11 months, the three agreements are yet to be executed between the parties. As a result of pending issues and exorbitant increase in fuel prices, KE’s borrowing for working capital /general loan has reached an alarming level of Rs 133.437 billion which is unsustainable. On March 8, 2022 Power Division warned KE to clear payment against additional supply from national grid or face severe action like reduction in quota or complete disconnection. Presently, KE is being supplied 800-900 MW electricity due to revision in quotas of all the Discos despite the fact the power utility is not meeting its payment obligations.

On March 29, 2022, Central Power Purchasing Agency –Guaranteed (CPPA-G) stated that K-Electric is not making any payment against the additional supply from the National Grid since November 2021, despite its firm commitment.

Copyright Business Recorder, 2022

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