ISLAMABAD: M/s Saif Power Limited has advised the federal government to align input cost of power generation as per international price trends to avert potential shut down or “expensive” international litigation.
The company’s Chief Executive Officer, Sohail H Hydari explained the current situation of his company in a letter to Chief Executive Officer (CEO)/ CFO CPPA-G, copies of which have also been sent to Secretary Power Division, Managing Director PPIB and Managing Director, NTDC.
According to Saif Power, in June 2020, RLNG tariff was Rs 6.8183/kWh, which increased to Rs 11.3342/kWh in June 2021 and reached Rs 28.8128/kWh in June 2022.
The power company also noted that its 30 days fuel amount was Rs 1,029,876,396 in June 2020 increased to Rs 1,711,984,666 in June 2021 and jumped to Rs 4,352,055,884 in June 2022.
Likewise, HSD tariff was Rs 14.4514/kWh in June 2020, which increased to Rs 20.1817 kWh in June 2021, and was hovering around Rs 54.8577/ kWh at the end June 2022.
He said, the amount required for 30 days fuel, which was Rs 2,182,825,008 in June 2020 increased to Rs 3,048,363,444 in June 2021. The required amount was at Rs 8,286,031, 766 in June 2022.
Sohail Hydari said that CPPA-G can very clearly note that the cost of business has jumped 2.5 times in LNG and 2.7 times in HSD from last year. Secondly, due to higher CPI, the cost of variable fee to O&M Operator has also increased.
The lender banks are not prepared to increase the working capital line significantly, due to group/ company’s exposure limits and due to sector exposure limit. This means that the company needs to receive regular payments on a daily basis from CPPA-G to keep the plant operating, he added.
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On daily basis, M/s Saif Power needs around Rs 160 million while CPPA-G is paying between Rs 10-20 million only, he said, adding that Rs 5.7 billion (reduced significantly by discounting cost) received as second instalment will be consumed quickly and then there would be difficult liquidity issues.
“We are writing this letter to sound an alarm so that CPPA-G may realize what the actual situation on the ground is,” he said, urging CPPA-G that as the base of the cost structure has changed, the Market Operator should also align daily payments with the new costs.
Hydari recalled that last time when 9 IPPs closed down their plants due to lack of fuel caused by non-payment from CPPA-G, IPPs had to go to LCIA where they won, and expressed the opinion that none of the parties including CPPA-G would like to repeat that cumbersome and expensive process again.
Copyright Business Recorder, 2022