The Private Power Infrastructure Board (PPIB) has warned the government to clear the outstanding receivables of independent power producers (IPPs) or face humiliation at every forum as the companies are threatening to call GoP guarantees, sources in PPIB told Business Recorder.
They said that letters from the Chief Executive Officer (CEO) of Hub Power Company (Hubco), Javed Mahmood, and CEO of Rousch (Pakistan) Power Limited, Fazal Hussain Asim, are tantamount to threats from these two very important IPPs.
"It is regrettable that after first tranche, promised payments are not being released and our total outstanding has reached Rs 41 billion. It is in the interest of all parties to reduce the burden and therefore we are requesting you to please direct Wapda and Pepco to clear our outstanding at the earliest because these are in clear violation of PPA and Implementation Agreement(IA)," sources quoted, Hubco CEO as having written to the Minister for Water and Power, Pervez Ashraf. He also held a meeting with the Minister and conveyed similar sentiments.
Hubco has also lodged a complaint against Wapda for not providing fully placed Letter of Credit (L/C) for the current fiscal year, sources added.
"We would also inform you that Wapda has not yet been able to provide us the fully placed L/C for 2008-09 which is presently short by over Rs 3 billion and in addition Wapda needs to ensure that it would provide Hubco with full L/C for 2009-10 latest by May 31, 2009. Keeping in view the fuel prices, the amount is expected to be greater than Rs 13 billion," said Hubco CEO. It is not clear whether Wapda met the deadline or not.
Sources said that PPIB Managing Director Fayyaz Elahi had apprised the decision makers that outstanding receivables of Hubco had reached a figure of Rs 36.2 billion by May 12, 2009 and due to nonpayments by Pepco/Wapda, the outstanding amount is snowballing once again towards gigantic proportions.
"Hubco has also agitated on the non-establishment of L/C by Pepco for the full amount ie Rs 13 billion for 2008-09," sources quoted PPIB MD as saying. Fayyaz is of the view that Hubco's role in power sector is of great significance and considered most reliable in view of power generation. The non-payment to Hubco would not only impair its financial capability to operate the plant but would also create a massive problem for GoP.
Another company, Pousch (Pakistan) Power Limited, has expressed even greater reservations than Hubco, saying that nothing was paid to the company through issuance of Rs 80 billion Term Finance Certificates (TFCs) though it was initially assured that one-half of the company's overdue payment as on December 31, 2008 would be settled through TFCs proceeds.
The Rousch CEO claims that the company's stock balance would be settled subsequent to the release of Rs 12 billion subsidy by the GoP. Rousch has been given the impression that the said amount of Rs 12 billion was being diverted to gas companies ie SNGPL and SSGC, sources quoted Rousch CEO as saying in a letter on May 15.
"The persistent delays in release of overdue invoices by Wapda have resulted in default in meeting the debt service account besides causing delay in setting contractors' payment and other essential payment liabilities thus exposing the plant operation at risk," he said.
Hussain said that the delay in payments of current bills as well as release of stock balances even after the assurance is causing great concerns among the sponsors and lenders of the company. "If remedial measures to improve the situation are not taken on war footing, we are afraid that we would be compelled to exercise the contractual rights available under the IM ie calling GoP guarantee for payments, which is definitely not desirable and preferred route," sources quoted Rousch CEO as warning the government.
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