ISLAMABAD: China Power Hub Generation Company Limited (CPHGCL) has urged Central Power Purchasing Agency–Guaranteed (CPPA-G) to make a payment of Rs 25.4 billion to clear liabilities and other debt servicing.
In a letter to Chief Executive Officer (CEO), CPPA-G, the Chinese company’s Chief Financial Officer, has cited the reference of previous correspondences and meetings, in which the company has noted that CPPA-G has to make payments of Rs 25.4 billion against debt servicing and operational needs till the end of the current month.
Of total amount of Rs 25.4 billion, Rs 9.155 billion are required for debt servicing, CTS transshipment fee already overdue Rs 5.040 billion, O&M fee already overdue Rs 941 million, other operational payments on monthly basis Rs 3.720 billion and expected spot coal procurement of 150,000 tons, Rs 6.510 billion.
According to the Chinese power company, payments include debt service payment of Rs 9.16 billion which has to be paid to long-term lenders of the companies before January 10, 2024 against debt servicing requirements and considering SBP formalities for foreign payments.
The CPPA-G has been requested to make the dues available before January 5, 2024. Considering requirements of such funds by the Company, CPPA-G should prioritize higher allocation of funds to CPHGC to avoid default towards its lenders, services, suppliers and others. Failure to comply could potentially lead to losses for the GoP due to default incurred by the company.
Additionally, in November 2023 CPPA-G allocated only Rs9 billion to the Company which is significantly lower than the expected release.
As a result, CPHGC’s recovery percentage has notably diminished and recovery as such a rate has fallen considerably below that of the peer CPEC power plants. Resultantly, this has placed the Company in a challenging situation which can be resolved through an urgent release of funds. This will bolster the Company’s cash flows from its overdue receivables which stand at Rs 84.82 billion (against total receivable of Rs 96.62 billion as on November 30, 2023) ensuring uninterrupted operations.
The power company has requested CPPA-G to allocate maximum funds to the Company along with necessary support (to ensure the availability of foreign currency) to ensure uninterrupted power supply to the national grid and to avoid contractual defaults thereof.
Copyright Business Recorder, 2023