Analysts stress need for long-term resolution of IPPs issue

Although the four independent power producers (IPPs) have withdrawn the notices invoking sovereign guarantee, following assurance that Rs 15 billion outstanding dues will be cleared soon, another crisis of the same nature is fast developing as similar payment is getting matured by the end of this month.
According to information available here, the four IPPs, Nishat Chunian, Nishat Power, Liberty and Atlas Power, withdrew the notices of sovereign guarantee, issued to the government of Pakistan, after meeting Minister for Water and Power, who assured clearance of all dues within a week's time.
While analysts in energy sector welcomed the stand of the government to release the long-awaited payment in favour of these IPPs, they termed it a temporary solution, as the payment being released would be till the middle of May 2011 only against power being sold to Wapda and Pepco by the IPPs.
They said that another invoice of more than Rs 15 billion is in the making which will mature by the end of June 2011 and the IPPs have no clue when they would get the payment of the current month running in billions of rupees. They are bewildered over the crisis which is in the making as the IPPs will be facing the same situation very soon which they are faced with today relating to the release of their overdues suffocating their operations from being run smoothly without sufficient flow of cash.
Analysts appreciated the efforts of the IPPs in as much as they never stopped producing power even during the severe cash crunch, and the amount billed during this period also runs into billions of rupees with each IPP sending invoice of around Rs 2.5 billion per month. The government has to pay more than Rs 15 billion to these IPPs.
They said that IPPs established under different policies, getting fuel from the government stopped production last week but those arranging their own fuel continued to produce power ensuring supply of 825 mw electricity while their payments were yet to be cleared. They emphasised that the process of paying off the IPPs must not be interrupted at any stage now, or in future, in order to wipe out energy crisis in the country once and for all.
Analysts stressed the need for resolving the circular debt issue and requested the government to devise a proper mechanism to ensure that payments are made on monthly basis to avoid recurrence of such unfortunate events. They expressed hope that this time the government would not delay payment to IPPs as it is not in the national interest to add to the energy crisis, increasing miseries of common man and the industry as well.