ISLAMABAD: M/s Atlas Power Limited (APL) has warned the government that it would announce force majeure under the Power Purchase Agreement (PPA) if its remittances related to imports are not allowed.
The company conveyed its cautionary message in a letter to Managing Director Private Power & Infrastructure Board, Shah Jahan Mirza.
M/s APL wrote a letter to Managing Director PPIB on February 1, 2023 in which the former explained its precarious position developing due to restriction placed on imports by the Government/ SBP.
According to the letter, the company, in a meeting with MD PPIB explained its challenge with respect to keeping the plant functional and sought the latter’s help in meeting obligations and responsibilities; however, things have only gone from bad to worse since then.
The power company raised the issue of non-payment by the banks to foreign suppliers against LCs and bank contract that were duly approved by SBP. These pending payments to foreign suppliers pertain to consignments some of which were cleared as far back as October last year. Payment was to be made to supplier on receipt of shipping documents in the bank which were delivered promptly.
The power company claims that out of Euro 1.8 million, only Euro 8,921 was paid on March 21, 2023 after a lapse of almost five months, adding that if regular daily payments of this quantum are assumed, then this pending amount would take over 200 working days to be fully paid as unfortunately the bank is not committing to settle the full amount and instead is committing to only the two smaller amount invoices by the end of current financial year.
APL further informed PPIB that its OEM has stopped dispatch of all its orders already placed and ready for delivery till full settlement of the amount of $ 1.8 million.
Further, the OEM is also asking for financial cost and warehousing fee on parts lying ready for dispatch with them.
The major overhaul of five engines is already due but the company is not able to perform it due to unavailability of spare parts. The OEM has advised APL not to operate these engines without performing the overhaul.
“Since Ramadan and with the summer season is approaching, we expect to get regular dispatch instructions from NPCC but complying to these instructions would be highly risky without performing due maintenance.
Resultantly, we will be forced to suspend our operation soon. We once again request that liquidity damages and/or capacity deduction should not be levied on our plant as the circumstances are beyond our control,” said Razi-ur-Rahman, CEO, APL in his letter.
The consignments of Euro 5,725,491 duly approved by SBP have been held at supplier warehouse.
Major overhauling of APL engines started last year but the process has been halted since last two months due to remittances issues. The plant’s engines have overshot the recommended running limit but are still being operated at risk.
Copyright Business Recorder, 2023