ISLAMABAD: As the country’s energy sector is facing a cumulative circular debt of stock of over Rs 4 trillion, Nuclear Power Plants (NPPs) are also victim of indecisions of federal government entities with respect to payment of overdue receivables. Of Rs 4 trillion total circular debts, Rs 2.6 trillion is related to power sector whereas the stock of petroleum sector stands at Rs 1.7 trillion.

The organizational affairs of Pakistan’s nuclear power plants, established by Pakistan Atomic Energy Commission (APEC), are being run by the Strategic Plans Division (SPD).

Well informed sources told Business Recorder that the Central Power Purchasing Agency –Guaranteed (CPPA-G), the market operator, has only paid 7.74 per cent of billed amount during April 2023.

Power Division says circular debt crosses Rs4trn mark

According to SPD, the amount being released is insufficient to meet the operational/ maintenance expenses of the plants and obligatory contractual payment (fuel, spares and loan).

“Insufficient revenues release by CPPA-G may lead to default in repayment of sovereign guaranteed loans and other contractual payments,” sources quoted SPD as saying in communication with the CPPA-G.

The sources said that the government has to repay loan of Rs 93 billion ($ 322 million) to Exim Bank of China, Rs 50 billion fuel payment and Rs 10 billion on Operation and Maintenance (O&M)), totalling it to Rs 153billion.

“SPD has requested that CPP-G be directed for payment of requisite amount to meet contractual obligations including repayment of foreign loan and avoid default situation,” the sources maintained.

On October 19, 2022, Strategic Plans Division (SPD), in a letter, reiterated that PAEC is facing serious financial challenges due to declining release of revenue payments against monthly billing, adding that despite repeated requests regular release of revenue has not visibly improved.

Strategic Plans Division further stated that CPPA-G only paid 39.51 per cent of the billed amount in past three months of Current Fiscal Year (CFY).

According to SPD, the amount being released is insufficient to meet the operational/ maintenance expenses of the plants and obligatory contractual payments (fuel, spares and loan).

SPD maintains that insufficient revenue release by CPPA-G may lead to default in repayment of sovereign guaranteed loans and other contractual payments.

Details of PAEC’s liabilities were at Rs 126 billion due to be paid from October 2022 to April as follows: (i) Exim Bank China (Rs 73 billion ($ 330.47 million); (ii) local banks (Rs 7.50 billion); (iii) fuel payment (Rs 38.50 billion); and (iv) O&M expense, Rs 7 billion.

SPD in its letter requested Secretary Power Division to direct CPPA-G to ensure payment of 80 per cent of the billed amount on monthly basis to ensure smooth functioning of base load plans and meet contractual obligations including repayment of foreign loan. In November 2022, Finance Division had shown willingness to pay Rs 93.438 billion to Government-owned Power Plants (GPPs) on the same mode adopted for payments to Independent Power Producers (IPPs).

Copyright Business Recorder, 2023

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Tulukan Mairandi May 23, 2023 02:01pm
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