IPPs faced with mind boggling situation

The nine independent power producers (IPPs) are faced with a "mind boggling" situation after serving notice to the government for payment of their overdues running in billions of rupees. Well informed source told Business Recorder here on Friday that they have been caught up on a sticky wicket to the extent that if they stop supplying electricity to the government they could technically be heavily penalised because of their inability to buy fuel.
Experts in the energy sector said that the nine major IPPs, established under the 2002 policy, including Nishat Chunian, Nishat Power, Liberty Power, Atlas Power, Attock Gen Ltd, Saif Power, Orient Power, Halmore Power and Sapphire Power, are faced with a serious dilemma as they are not being paid over-dues of at least Rs 43 billion by the government. At the same time, they fear that they may be lashed with heavy penalty if they fail to supply uninterrupted electricity to the Pepco.
They said though the IPPs are the aggrieved party: they are facing music as Pepco has not cleared their over-dues, running in billions of rupees, and is demanding to continue their supplies without any interruption. This is considered totally unfair as the IPPs buy fuel for the production of electricity on their own, without any financial assistance from the government under the Power Policy 2002.
Experts explained that IPPs were established under Power Policy 2002 with the condition that if any producer failed to supply electricity due to any reason, the Pepco could heavily penalise the producer by withholding capacity charges. On the other hand, the government is also bound to pay capacity charges, if it failed to order supply of electricity to any IPP.
The policy seems to be a fair arrangement provided both parties adhere to the terms agreed in the contract, they said. Experts, however, criticise the government as Pepco has not made even the usual part payments to any of the nine IPPs since August 30, 2011, which is a violation of the agreement as the government is bound, under the agreement, to make payment of the power supplied by the IPPs after lapse of 30 days.