AGL 5.78 Increased By ▲ 0.03 (0.52%)
ANL 8.88 Increased By ▲ 0.03 (0.34%)
AVN 78.93 Decreased By ▼ -0.57 (-0.72%)
BOP 5.29 Increased By ▲ 0.12 (2.32%)
CNERGY 4.70 Increased By ▲ 0.01 (0.21%)
EFERT 81.57 Increased By ▲ 0.47 (0.58%)
EPCL 50.96 Decreased By ▼ -0.03 (-0.06%)
FCCL 13.35 Decreased By ▼ -0.14 (-1.04%)
FFL 5.74 Decreased By ▼ -0.07 (-1.2%)
FLYNG 7.15 Decreased By ▼ -0.06 (-0.83%)
FNEL 4.82 Increased By ▲ 0.02 (0.42%)
GGGL 8.87 Increased By ▲ 0.17 (1.95%)
GGL 15.90 Increased By ▲ 0.15 (0.95%)
HUMNL 5.79 Decreased By ▼ -0.06 (-1.03%)
KEL 2.68 Increased By ▲ 0.10 (3.88%)
LOTCHEM 29.06 Decreased By ▼ -0.44 (-1.49%)
MLCF 24.99 Decreased By ▼ -0.31 (-1.23%)
OGDC 72.46 Increased By ▲ 0.01 (0.01%)
PAEL 15.35 Decreased By ▼ -0.05 (-0.32%)
PIBTL 5.06 Decreased By ▼ -0.09 (-1.75%)
PRL 16.31 Increased By ▲ 0.06 (0.37%)
SILK 1.08 Increased By ▲ 0.01 (0.93%)
TELE 9.39 Increased By ▲ 0.09 (0.97%)
TPL 7.34 Decreased By ▼ -0.01 (-0.14%)
TPLP 18.90 Decreased By ▼ -0.26 (-1.36%)
TREET 21.95 Increased By ▲ 0.10 (0.46%)
TRG 140.87 Decreased By ▼ -1.93 (-1.35%)
UNITY 17.01 Decreased By ▼ -0.19 (-1.1%)
WAVES 9.90 Decreased By ▼ -0.13 (-1.3%)
WTL 1.41 Increased By ▲ 0.03 (2.17%)
BR100 4,255 Increased By 7.1 (0.17%)
BR30 15,733 Decreased By -28.8 (-0.18%)
KSE100 42,394 Increased By 44.9 (0.11%)
KSE30 15,664 Increased By 31.9 (0.2%)
Print

Non-availability of forex: CPHGC lands in hot water as SBP stops payments

  • Suspension of payments causes it to default on payments to its coal suppliers
Published July 22, 2022
Follow us

ISLAMABAD: The China Power Hub Generation Company (Pvt.) Ltd. (CPHGC) has revealed that State Bank of Pakistan (SBP) has stopped various payments relating to its coal trade due to non-availability of the foreign exchange in the country, which has resulted in default on payments to its coal suppliers.

CPHGC established a 2x660 MW coal fired power plant with an investment of $ 2 billion under CPEC framework which is supplying uninterrupted electricity to more than 4 million Pakistan households.

According to CEO, CPHGC, Ren Lihui, as per directions of the government of Pakistan, the company signed an agreement for purchase of Afghanistan coal in order to save depleting foreign exchange reserves.

The reliability of coal supply was discussed in detail with Secretary Power who is considering land supply routes and availability of Afghan coal.

“We negotiated our coal procurement with suppliers with an off-take of 100,000 tons of coal within a 30-day period. Supplier also agreed to provide 150,000 tons for each subsequent month after the first 30 days. However, the supplier is unable to provide reasonable quantity required to operate the plant without interruptions due to various reasons,” he added.

CPHGC seeks funds for procurement of Afghan coal

However, till July 20, 2022, the power generation company received 1,300 tons of coal after 12 days of signing the agreement.

In a letter to the Secretary Power, copies of which have also been sent to Chairman NEPRA, CEO CPPA-G, MD PPIB and other concerned officials, CEO CPHGC said that the coal stock available at the plant site has reduced to 41,000 tons which is equal to four days of stocks at full base load. Considering, critical stock in hand and inability of supplier to provide coal from Afghanistan, the company has worked out a mix of its minimum coal purchase requirements to assist the government of Pakistan in providing uninterrupted electricity supply.

This coal purchase requirement can further increase based on the higher load from the government of Pakistan.

The power company will purchase total 1,345,298 MT of coal till December 2022, of which share of Afghan coal will be 371,051 MTs, South Africa, 899,248 MTs and Indonesia 75,000 MTs.

CPHGC further highlighted the fact that due to non-availability of foreign exchange in the country, State Bank of Pakistan recently stopped various payments relating to its coal trade which has resulted in default in payments to its suppliers.

“We highlighted this fact to PPIB, CPPA-G and SBP that owing to this delay in payment of coal invoices, the supplier has stopped its supplies to the company,” he said adding that the company has also delivered notices through letters dated June 14, 2022 and July 13, 2022 to PPIB under section 10.4 of Implementation Agreement (IA) under which the Government of Pakistan is responsible to make available required foreign exchange.

According to the company’s claim, till the writing of the letter (July 20, 2022), the payments are still pending for want of State Bank of Pakistan’s approval.

“Due to non-payment of these two shipments, supplier is not accepting any further coal orders. Any further delay in these payments can adversely affect the ability of CPHGC to operate smoothly,” said CEO of the company.

The company sought the attention of Secretary Power to various correspondences and meetings with CEO CPPA-G wherein it has been requested to increase allocation of funds.

Currently, CPHGC does not have enough funds to discharge its liabilities towards coal suppliers let alone discharge its obligation towards other O&M costs, which is outstanding for more than 6 months past.

Based on provided procurement plan and based on assumed CIF price of $350 per metric ton for South African coal and Rs 72,000 per metric ton for Afghan coal and past due payables to coal supplier, the Company required Rs131.62 billion till December 2022, of which Rs22.61 billion are needed for July 2022, Rs22.23 billion for August, Rs19.12 billion for September, Rs21.96 for October, Rs19.12 for November and Rs26.58 billion for December 2022.

In addition to US dollar requirements, debt servicing for CPHGC is due at the start of October 2022 amounting to $68.5 million approximately. The current receivables of the company stood at all-time high of Rs72.44 billion including overdue receivables of more Rs53 billion.

In view of existing scenario, CPHGC has requested Secretary Power to intervene for the following: (i) allow the Company to procure coal from South Africa as per minimum procurement plan as per the existing tariff and CSA to avoid shut down of plant;(ii) release of funds from the company’s overdue receivables; and (iii) make availability of foreign exchange to discharge obligation towards contractors & suppliers.

“If the government of Pakistan fails to fulfill its responsibilities or does not respond in timely manner, any loss, damages or LDs should be borne by the government of Pakistan,” said Ren Lihui.

Copyright Business Recorder, 2022

Comments

Comments are closed.

Gauravi Pal Jul 25, 2022 10:04am
And the acting SBP governor claims there is sufficient forex to cover the liabilities.
thumb_up Recommended (0)

Non-availability of forex: CPHGC lands in hot water as SBP stops payments

Pakistan's CPI-based inflation in November clocks in at 23.8%

Rupee registers gains, settles at 223.69 against US dollar

Rise in TTP attacks in Pakistan should be concern for Afghan Taliban as well: Rana Sanaullah

SBP-held foreign exchange reserves fall $327mn, stand at $7.5bn

Fawad says PTI to dissolve Punjab, KP assemblies next week

PM Shehbaz calls for ‘practical implementation’ of loss & damage fund to cope with climate challenge

EU tentatively agrees $60 a barrel price cap on Russian seaborne oil

No restrictions placed on LCs for import of oil, other petroleum products: SBP

Record-breaking England put Pakistan to the sword in first Test

Google app payments: IT ministry says issue resolved