- CEO says some commitments were made with company that need follow-up for implementation
ISLAMABAD: Port Qasim Electric Power Company Limited (PQEPC) has reportedly accused CPPA-G of flouting instructions of Prime Minister Shahbaz Sharif and imposing penalties without ensuring coal supply to the plant. The power company’s CEO Guo Grangling, stated this in a letter to Finance Minister copies of which were also sent to the Prime Minister, Chinese embassy and other concerned ministries/organisations, while appreciating them for participating in a joint meeting held on July 29, 2022.
According to the CEO, some commitments were made with the company during the meeting which need follow-up for implementation.
He said one of the issues was availability of foreign exchange, adding that the State Bank of Pakistan (SBP) had constrained the availability of foreign exchange which is affecting the PQEPC as an imported coal project.
“Such constraints directly postpone the settlement process between PQEPC and coal contractor, which has a negative impact in guaranteeing consecutive coal supply,” he added.
The PQEPC has appreciated the power purchaser, ie, CPPA-G for following up with the SBP on daily basis to expedite foreign exchange process, however, it’s still not sufficient to settle with coal contractor timely. Therefore, the Minister of Finance and Revenue should fulfil the commitment that $25 million foreign exchange requirements be allowed on August 01, 2022.
Commenting on proposal for exemption in capacity payment deduction, the company argued that as per the Prime Minister direction on May 30 with Chinese enterprises and the Minister of Finance and Revenue commitment made during July 29th joint meeting, both parties have evolved consensus that the capacity payment deduction shall be exempted due to fuel shortage incurred by huge overdue amount. However, the deduction still occurred in POEPC Apr-22 and Jun-22 capacity payment invoices amounting to Rs5.77 billion. The company has requested Minister of Finance and Revenue, Dr. Miftah Ismail to immediately direct the power purchaser to exempt it from deduction of capacity payment and prevent the possible deduction in future until PQECP has sufficient funds to guarantee consecutive coal supply.
M/s PQEPC has clarified on different occasions to each stakeholder that the cash flow has ruptured due to huge overdue amount and the rupee devaluation further aggravates such a situation.
In order to ensure that plant survives and avoids loan default, the power purchaser has been requested to ensure monthly tariff payment to cover operation cost in dollars.
According to the company the coal contractor has refused to receive the PQEPC orders for September 2022 due to huge overdue amount cautioning that current coal inventory plus the orders under transit is only sufficient to full generation in August.
The power company has requested CPPA-G and the SBP to enhance tariff payment and foreign exchange to restore the coal supply in September or allow the company to run at 50% of capacity without capacity payment deduction.
“Each stakeholder is requested to fulfill the direction of Prime Minister and the commitment made timely to save project and avoid loan default. PQEPC is willing to cooperate with stakeholders to overcome difficulty together until the economic recovery,” the CEO added.
Copyright Business Recorder, 2022