Conversion of PKR into USD: PPIB conveys its reservations regarding IPPs to SBP

ISLAMABAD: The Private Power & Infrastructure Board (PPIB) has conveyed its reservations with respect to power plants including IPPs to the State Bank of Pakistan (SBP) for not converting their PKR into USD amounting to $600 million, which is creating serious issues for the power producers.

PPIB Managing Director Shah Jahan Mirza, sources said, in his letter to Governor, SBP, Jameel Ahmed referred to the discussion at the Special Investment Facilitation Council (SIFC) meeting titled “SBP-availability of USD for foreign payments.”

According to the PPIB, Independent Power Producers (IPPs) are facing delays in seeking SBP’s approval for conversion of PKR to USD in order to fulfill their commitments/financial obligations towards their project lenders, coal suppliers, O&M contractors, insurers, spare parts imports, etc. under their respective project agreements.

PPIB urges SBP to clear $700m dues of power projects

“IPPs are continuously agitating the matter at various fora and requesting PPIB to facilitate them and take it up with SBP for the smooth development and operations of their projects,” he averred.

The sources said power producers have also raised this issue with Central Power Purchasing Agency-Guaranteed (CPPA-G). However, CPPA-G, the Market Operator, maintained that it is clearing most of the invoices of power producers but it is not responsible for conversion of PKR into forex, suggesting power companies to approach SBP in this regard.

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, $23,330,196, CNY 47,774,067; (ii) Port Qasim Electric Power Ltd, $1137,019,182 (iii) Huaneng Shandong (Sahiwal), $214,949,701, CNY, 94,378,581; (iv) Engro Powergen Thar $85,158,967, Euro 98,234; (v) Thar Energy Limited $22,361,789; (vi) Thal Nova Power Thar Limited $22,650,986; (vii) Lucky Electric Limited $3,445,731; (viii) SECMC $38,019,482, Euro 105,876; (ix) Karoot Power Limited $8,552,663; (x) Attock Power Gen Limited Euro, 2,142,442; (xi) Narowal Energy Limited $1,760,650; (xii) Engro Energy Limited $10,069; (xiii) Hub Power Limited $ 5,585,963, Euro 714,965 and; (xiv) Rousch Power Limited $3,652,640 and Euro 714,640.

Total pending amount in USD is 542,498,019.75 Euro, 3,258,831.86 and CNY, 20,150,723.24. In the dollar terms, pending cumulative amount is $565,907,575.

The sources said, the payment and conversion of PKR into foreign exchange issues of Chinese power producers under China Pakistan Economic Corridor (CPEC) also came under discussion during the recent visit of caretaker Prime Minister, Anwar ul Haq Kakar to China.

According to sources, caretaker Minister for Energy, Muhammad Ali and caretaker Finance Minister, Dr Shamshad Akhtar who accompanied the caretaker Prime Minister explained the situation to the Chinese leadership and representatives of power companies.

The CPPA-G is to pay about Rs 350 billion to Chinese power producers.

Copyright Business Recorder, 2023