The Ministry of Finance has released Rs 5.549 billion to Water and Power Development Authority (Wapda) as subsidy to clear the outstanding dues of independent power producers (IPPs), official sources told Business Recorder. This amount is in addition to Rs 3 billion, which was released during the third week of last month, sources said.
They said that some of the IPPs had even threatened to suspend power supply to Wapda during crisis days if payments were not made to them. "Payment has been made on provisional basis as subsidy to pick up inter-discos tariff differential which would be adjusted," they said, adding that the released amount would enable Wapda to make payment to the IPPs.
The Finance Ministry had cleared the concept of this payment by saying that the sanction "does not involve cash payment" as the State Bank of Pakistan (SBP) has been advised to credit Rs 5.549 billion to Wapda's account maintained with National Bank of Pakistan.
Sources said that the outstanding amount against Wapda on account of power purchased from IPPs was around Rs 9 billion--for January and February--and the IPPs wanted clearance of their dues to meet their daily expenditures and expansion in their plants.
According to sources, an inter-ministerial meeting, chaired by Minister for Water and Power Liaquat Ali Jatoi on February 20 had discussed the issue in detail and decided to clear the outstanding dues of IPPs immediately as the country was earning bad name among international community.
The IPPs' representatives stressed the need to devise a mechanism for smooth payments to encourage the IPPs, which are supplying power to Wapda, said an official.
Sources further said that the federal government has agreed to directly pay 50 percent of differential between the cost of gas and alternative fuel to the IPPs, in case the supplier fails to supply gas during the committed period.
They said that the ECC had decided some time ago that 50 percent of the differential cost of gas and alternative fuel is to be picked by the GoP in case of non-supply by the gas supplier during the committed period. However, the payment mechanism was not described.
The Ministry of Water and Power had told the Petroleum Ministry on August 25 last year that the primary responsibility for the consequences of non-supply of gas was of the gas company but the GoP was not taking any action and defraying the cost to the gas companies and not the IPPs.
Sources said that some Ministries argued that the GoP should not make the payment directly to the IPPs. Rather the payment should be made to the gas companies. They were also of the opinion that the Implementation Agreement (IA) should fundamentally be a guarantee/support document and GoP should not be the primary obligor, sources added.
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