ISLAMABAD: Private Power & Infrastructure Board (PPIB) has urged State Bank of Pakistan (SBP) to clear pending payments of $700 million of power projects including CPEC-IPPs in order to ensure smooth development and operations of their projects, sources close to MD PPIB told Business Recorder.
Managing Director PPIB Shah Jahan Mirza, sources said, in his letter to Deputy Governor, SBP, Saleem Ullah has referred to various letters received from Independent Power Producers, with the majority from those established under China Pakistan Economic Corridor (CPEC), wherein they have showed serious concerns regarding delays in SBP’s approval for conversion of PKR to USD in order to fulfil their commitments/ financial obligations towards their project lenders, coal suppliers, O&M contractors, etc., under respective project agreements.
“IPPs are agitating at various fora and requested PPIB to facilitate them and take up the matter with SBP for the resolution at the earliest, in order to avoid unnecessary delays and for the smooth development and operations of their projects,” Mirza added.
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PPIB argues that that non-availability of requisite foreign currency would result in Lapse of Consent under Implementation Agreements (IAs) signed between IPPs and the GoP and that would expose the GoP to various potential litigations.
Further, pursuant to provisions of IAs, it is the responsibility of the GoP to make available through SBP, the foreign currency, within specified time; otherwise, it will create embarrassing situation for the GoP wherein projects default due to non-availability of foreign exchange.
PPIB has requested SBP to resolve the matter of the IPPs at the earliest in order to ensure smooth development and operations of their projects.
Pending approvals of IPP pending payments are as follows: (i) China Hub Power, $67,81,855; (ii) Port Qasim Electric Power Ltd, $137,107,709; (iii) Huaneng Shandong (Sahiwal), $287,593,422, RMB, 41,472,786; (iv) Engro Powergen Thar $88,085,541, Euro 98,234; (v) SECMC $ 48,336,700, Euro 105,876; (vi) Pak-Matiari Transmission Co. Ltd, $61,443,330, RMB 101,400 ;(vii) Karot Power Limited $104,025,713, RMB 5,412,663; (viii) Attock Power Gen Limited Euro, 2,122,230; (ix) Rousch Power Limited $3,649,322 , Euro, 1,106,513.
Total pending amount in USD is 688,273,562 Euro, 3,326,878 and RMB, 6,422,002. In dollar terms pending cumulative amount is $698,237,465.
According to M/s PMLTC, as per the provisions of the Facility Agreement of November 9, 2018 executed between PMLTC and the Lender and the Debt Servicing Schedule, the power firm is obligated to repay the principal and interest attributable to the next instalment with an amount of USD 105,265,744.25 on October 15, 2023.
However, PMLTC has only completed the conversion for USD 43,970,807.71 - about 40% of the total debt servicing requirement, the remaining amount of USD 61,294,936.54 has to be converted within a very short before the due repayment date.
PMLTC maintains that it has lodged applications for conversion of dollars from Pak Rupee to State Bank of Pakistan from time to time; however it is very difficult to acquire the approval from SBP efficiently, with applications equivalent to about USD 30 million pending with SBP for a prolonged period, and a funding shortfall equivalent to about USD 31 million exists and payment from NTD/ CCPPA-G is awaited.
Chinese company maintains that in view of the current situation and its urgency, it is deeply worried that the risk of entire conversion to USD for debt servicing requirement may not be completed within the deadline due to delayed approval from SBP and delayed payment from NTDC/ CPPA-G, which will give rise to material breach under the Facility Agreement. If so, it will be detrimental to the smooth operation and the interests of stakeholders of the project.
The sources said, PPIB has also written a separate letter to SBP for conversion of M/s PMLTC Pak Rupee into USD. “We are deeply worried about the risk that the whole conversion of USD for satisfaction of the debt servicing requirement is unable to be completed within the deadline, because of prolonged approval from SBP and delayed payment from NTDC/CPPA-G, which will expand the loss of foreign exchange and give rise to material breach under the Facility Agreement, if so it will be detrimental to the smooth operation and the interests of stakeholders of the project,” the Chinese company stated.
Copyright Business Recorder, 2023
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