Exemption to capacity payment cut: PQEPC accuses CPPA-G of ignoring PM’s orders

ISLAMABAD: Port Qasim Electric Power Company (Private Limited (PQEPC) has reportedly accused Central Power Purchasing Agency–Guaranteed (CPPA-G) of not implementing Prime Minister’s instructions on exemption of Rs 4.64 billion deduction under the garb of capacity payment for July 2022.

In a letter to Managing Director PPIB, the CEO PQEPC, Guo Guangling has stated that the company is writing in accordance with PPA article 9.7 (a) to submit the invoice dispute notice in relation to the verification of capacity payment invoice of July 2022 with the disputed amount of Rs 4.64 billion which accounts for the capacity payment deduction due to a coal supply interruption for full generation.

PQEPC has submitted notice of payment default on monthly basis, and requested CPPA-G to arrange urgent payment to maintain coal supply and generation cost; besides PQEPC also sent an urgent notice to GoP in March and an emergency notice to the CPPA-G and Ministry of Energy in May to request stakeholders to arrange urgent payment to restore coal supply and ensure stable and continuous power generation.

The power company has appreciated GoP and CPPA-Gs efforts for arranging funds and making payments to it; however, the payment is insufficient to facilitate PQEPC to reduce over-dues, meet foreign exchange constraints with coal interruption always existing.

The Prime Minister had directed on May 30, 2022 that the capacity payment deduction shall be exempted due to huge overdue amount and the Minister of Finance and Revenue also stated that such exemption is reasonable during a joint meeting between Chinese embassy and Ministers regarding power sector on July 29, 2022. Furthermore, based on mutual benefit, PQEPC declared that available capacity depends on the limited coal inventory and shipment schedule to provide power to grid system to relieve power shortage.

Discos’ consumers to get relief: CPPA-G seeks 22 paisa/unit positive adjustment in Aug FCA

CEO PQEPC has requested CPPA-G to fulfil the direction of Prime Minister and Minister for Finance and Revenue to exempt Rs 4,637,756,379 deduction for capacity payment for the month of July 2022.

On September 21, 2022, the power company wrote a letter to timely inform CPPA and the stakeholders in power sector to allocate sufficient funds and approve foreign exchange in time to ensure plant has sufficient coal for full load running. However, the coal supply interruption still occurred due to huge overdue amount and foreign exchange constraints.

PQEPC has also clarified to each stakeholder that there is no technical limitation and the reason for a load decrease and unit shut down is interruption in coal supply.

As per the requirement of CPPA, the order to increase October and November shipments has been sent to PQEPC coal supplier, YONGTAI ENERGY PET LTD; however, considering huge overdue amount, the payment reminder has been received again requesting PQEPC to settle $ 75.77 million.

PQEPC always takes advantage of utilization of low price of Indonesia coal to decrease generation cost; however, such due amount has already breached the settlement clauses between PQEPC and coal supplier.

In light of current situation, the power company has requested CPPA-G to increase tariff payment and coordinate with SBP to approve PQEPC foreign exchange application in time; otherwise, the coal supplier has the right to postpone and adjust additional shipment schedule which will affect the proposal to build sufficient coal storage by the end of Dec-2022.

Copyright Business Recorder, 2022