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ISLAMABAD: M/s Engro Powergen Thar Private Limited (EPTL) has cautioned the federal government that it would shut down the plant if its financial issues remain unaddressed.

The company has written several letters to Central Power Purchasing Agency -Guaranteed (CPPA-G), specifically the letter of February 22, 2023, wherein it requested for payment of its outstanding liabilities and informed CPPA-G about upcoming debt servicing requirements to the tune of Rs28 billion.

The power company claimed hat it has only received Rs4.125 billion as of March 20, 2023 and still requires Rs24 billion to ensure successful debt servicing by end of May 2023.

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The Company’s Chief Financial Officer (CFO), Wang Pu, in a letter to CFO CPPA-G has clarified that this amount required for debt servicing is over and above the normal payments required for continued and sustainable operations of the power plant, including fuel, O&M and insurance, i.e., Rs 7 billion per month.

According to CFO EPTL, the power company’s outstanding receivables from CPPA-G have increased to a alarmingly critical level of approximately Rs 63.5 billion, with approximately Rs 55 billion overdue, adding that this significant overdue amount has resulted in a severe liquidity crunch for the company, as it is now facing substantial liabilities to settle, with payments to lenders and suppliers becoming due.

“This situation poses a severe threat to our operations and, if left unaddressed could potentially force us to shut down,” said Pu in his letter.

He has also claimed that EPTL is one of the most cost-effective power plants on the Economic Merit Order (EMO). The electricity produced from Thar Coal is providing critical relief to the national exchequer by reducing the overall basket price of electricity and resulting in foreign exchange savings of $ 50-60 million every month.

CFO, in his letter, requested prompt payments to reduce the outstanding receivables of EPTL and ensure the continued operation of the plant and the benefits it provides to the national economy.

China’s embassy has also raised the issue of Chinese IPPs at the highest level but the government has not yet formulated any mechanism to sort their financial issues which is the main reason for M/s Sinosure denying insurance of loans for new projects in Pakistan, said in insider in government who is dealing with Chinese IPPs.

The government recently sought approval from the power regulator, i.e., National Electric Power Regulatory Authority (Nepra) to impose surcharge of Rs 3.23 per unit from November 2023 onward for indefinite period meant to pay interest on loans of Power Holding Limited (PHL) and power generators. The Authority is expected to issue its determination within a week or so.

The issue of Pakistan Energy Revolving Accounts (PERA) meant for Chinese IPPs is still unresolved.

Finance Division has stated that pursuant to the ECC’s decision of October 31, 2022, it has accorded concurrence to Power Division/CPPA-G for draw of 56 instalments for the month of March 2023 from PERA amounting to Rs. 4 billion for onward exclusive payment to CPEC-IPPs after completion of all codal, financial, procedural and legal formalities as per laid down rules and regulations.

Regarding ex-post facto approval/ concurrence of the Finance Division for the period from Nov 2022 to Jan 2023, it will be processed once the requisite data of payables to CPEC-IPPs is received on specified format duly verified/ signed by Power Division/ CPPA-G. The data is required to ascertain the undisputed payable amount and remittance made by the CPPA-G from Nov 2022 onwards.

Copyright Business Recorder, 2023


1000 characters
Shanj Mar 27, 2023 06:30am
Very difficult situation created by belove Sharifs and Bajwas
thumb_up Recommended (0) reply Reply
Ik Mar 27, 2023 02:02pm
Government seeks approval from NEPRA? What a joke. NEPRA is busy in marketing activities.
thumb_up Recommended (0) reply Reply

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