SBP, Power Div, others: PQEPC approaches Shehbaz against ‘discriminatory’ attitude

ISLAMABAD: Port Qasim Electric Power Company (Private) Limited (PQEPC) has approached Prime Minister Shehbaz Sharif against “discriminatory” attitude of State Bank of Pakistan, Power Division and its attached organisations/ departments and Nepra with respect to foreign exchange constraints, huge overdue payments and most serious capacity payment deductions, sources close to Managing Director PPIB told Business Recorder.

Guo Guangling, Chief Executive Officer (CEO), PQEPC, in a letter to Prime Minister, appreciated him for his constant support and attention to the three CPEC coal-fired projects.

His letter is in continuation of the joint letters of January 20, 2023 and December 8, 2022, issued by three CPEC IPPs’ addressed to Prime Minister requesting him to resolve the capacity payment deduction issue.

CEO, PQEPC, reminded Prime Minister that since May 30, 2022, he had directed the relevant Ministries to resolve the capacity payment deduction issue by submitting a report to Cabinet for its approval as it was unfair to penalize the IPPs due to insufficient payment by CPPA- G (already constituted default under PPA) and non-availability of foreign exchange by SBP/PPIB (already constituted default under IA) for import of coal to produce electricity as per agreements these CPEC projects should have called for GoP guarantee years back but they never did so after taking two nations’ friendly relationship into consideration.

“Unfortunately, all three CPEC coal-fired projects have been approaching Ministry of Energy (Power Division), SBP, PPIB, CPPA, Nepra, NTDC, NPCC and all relevant authorities for countless times, but the huge overdue payment, foreign exchange constraints and most serious capacity payment deduction issues are still not resolved after almost 1 year, the unfairly deducted capacity payment is exceeding $ 100 million for only PQEPC,” claimed Guangling.

PQEPC argued that due to foreign exchange delayed by SBP, the power company is unable to pay its coal suppliers, and its coal suppliers had suspended supply since December 2022 as a result of default under Coal Supply Agreement. PQEPC has shut down the whole complex since February 02, 2023 due to non-availability of fuel.

CEO PQEPC further stated that the company has fully cooperated by following instructions given by Power Division, CPPA-G and Nepra, and arranged multiple public tenders for market coal procurement. However, Nepra has still not acknowledged the market public bidding result as per the pass-through principle.

“Non-availability of fuel has resulted in whole complex shutdown of PQEPC, but NPCC and CPPA-G, being fully aware of this situation, are still sending full-load dispatch orders to PQEPC, which resulted in all capacity payment deductions. PQEPC has lost all its income due to NPCC and CPPA’s unfair penalization, while the project’s cost such as O&M and debt service are still there,” CEO said adding that this would result in bankruptcy and cash flow issues very shortly.

The power company which has also shared its woes with Chinese embassy in Islamabad is of the view that after numerous meetings conducted and letters sent to all relevant GoP organizations there is no positive outcome, and the PQEPC Board has signed the resolution authorizing PQEPC to take legal action against GoP to secure the basic justified interest of the company. The company should not be penalized when the fault is not on the company side.

“Ensure timely payment, exchange, and stop capacity payment deduction and return previously deducted amount, cannot be further delayed,” CEO said threatening that once PQPEC enters into defaults and bankruptcy, it will have no choice but to call GoP guarantee, which could trigger across the board default for all CPEC projects and further slash Pakistan’s credit rating when it is already as low as Caa3 by now. This unfavourable outcome would cause a loss-loss situation to both Expressing his personal sentiments, Guo Guangling said: “we love Pakistan and genuinely want to make contribution to better economic growth of Pakistan”.

The company has requested Prime Minister, Sharif to immediately direct relevant authority to stop capacity payment deduction and return previously deducted amount.

Wrapping up his letter CEO PQEPC apprised Prime Minister that “We have done a specific study against current dilemma and difficulties being faced by GoP, hoping to report to you in person and provide solution on rapid development and foreign reserve increase of Pakistan.”

Copyright Business Recorder, 2023