ISLAMABAD: The Power Division has reportedly failed to resolve a dispute over an excess payment of Rs 7.43 billion between the Central Power Purchasing Agency – Guaranteed (CPPA-G) and K-Electric (KE), which has been pending for over a year, sources within CPPA-G told Business Recorder.
In May 2024, the Power Division released Rs 172.8 billion to CPPA-G on account of Tariff Differential Claims (TDC) for KE. In this regard, KE referred to the Power Purchase Agency Agreement (PPAA) between KE and CPPA-G and the Tariff Differential Subsidy Agreement (TDSA) between KE and the Government of Pakistan, both signed in January 2024.
According to KE, since the execution of the PPAA, it has fulfilled its obligations and paid Rs 71.5 billion directly to CPPA-G for power purchases—demonstrating its commitment to enhancing liquidity and sustainability within the power sector. As a result, KE states that there are no outstanding payables to CPPA-G after December 31, 2023.
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Furthermore, the power utility noted that following the release of the TDC by the Power Division on KE’s behalf, all dues to CPPA-G up to December 31, 2023, have been cleared. In fact, KE claims it made an excess payment of Rs 7.43 billion, which it seeks to be adjusted against future invoices under the PPAA.
KE has requested CPPA-G to issue a credit note of Rs 7.43 billion, to be made directly to KE rather than CPPA-G, in line with the TDS agreement. The utility has sent multiple letters to the Power Division requesting this credit note and seeking that future TDC disbursements related to the post-December 31, 2023 period be released directly to KE, as per the effective TDSA.
Most recently, on June 10, KE sent a letter to Additional Secretary (Power Finance), Mehfooz Bhatti, summarizing previous correspondence and reiterating its demand for a Rs 7.43 billion credit note and direct release of future TDC amounts.
Sources reveal that CPPA-G has shown willingness to issue a credit note of Rs 3 billion to KE, suggesting that the remaining amount be discussed with the Power Division. However, a final decision is still pending, and neither the Power Division nor CPPA-G has shared any update on the matter.
“KE contends that since it is paying the full amount against invoices issued by CPPA-G, a credit should be issued to facilitate proper accounting adjustments,” the sources added.
KE has also requested that the Power Division release the additional amount before June 30, 2025.
For FY 2025-26, the subsidy allocated to KE has been reduced by over 28%—from Rs 174 billion in FY 2024-25 to Rs 125 billion. However, an allocation of Rs 1 billion has been earmarked for agricultural tubewells in Balochistan, up from Rs 500 million in the previous fiscal year.
Copyright Business Recorder, 2025
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