ISLAMABAD: Port Qasim Electric Power Company Limited (PQEPC) has threatened to shut down operations of its 1,320 MW coal-fired power plant if its outstanding amount is not cleared by the government. This warning was issued by the Chief Executive Officer (CEO), PQEPC, Liang Yongbin to Finance Minister Muhammad Aurangzeb and other concerned authorities.
Under the guidance of the Government of Pakistan, the 1320 MW Port Qasim coal-fired Power Project was established under the China-Pakistan Economic Corridor (CPEC), to provide most clean, reliable, and economical electricity to the national grid, and endeavored to control the circular debt.
The Power Company argues that it appreciates the efforts of the GoP and the Central Power Purchasing Agency-Guaranteed (CPPA-G) on arranging funds and making electricity tariff payment to IPPs, however, the total due amount of the project reached Rs. 88.2 billion, ie, $ 317 million by 27 September 2024, with a delay payment period of over 6 months and could further escalate.
Energy producers: Aurangzeb takes up payments issue with PQEPC team
“In this case, the Project Shareholders/Sponsors from China and Qatar disclosed significant discontent and request to immediately take all necessary measures to reduce the outstanding amount. We notify that current due amount entitles PQEPC to proceed to suspend the plant operation according to PPA Section 9.10 without any Liquidated Damages,” said the CEO.
The PQEPC claims that it has comparative advantages on the EPP tariff, compared with other oil and LNG power plants. In this regard, project suspension will be a lose-lose situation that both sides should jointly make efforts to avoid.
Therefore, timely settlement of due amount of the Project is imminently required to ensure sustainable power generation and avoid constitution of Loan Agreement Default and GoP Sovereignty Guarantee Default.
“We draw your attention to the critical situation of payment delay confronting the Port Qasim Power Project, and authorities to provide financial support to CPPA-G enabling it to pay off the outstanding amount as early as possible,” said CEO PQEPC, Liang Yongbin in a letter to Finance Minister.
A team of Port Qasim Electric Power Company Limited discussed debt restructuring, loan extension and conversion of its plant on Thar coal.
The company’s team held back to back meetings at Islamabad to explore different options with respect to its financial woes, debts, loans extension etc.
The meetings focused on various matters related to the power sector including the payments to the energy producers and possible ways to resolve the issues hindering timely payments. Matters related to the technical and financial feasibility of converting these projects to run on domestic coal, thereby reducing reliance on imported fuel were also discussed
The Finance Ministry, sources said, is also concerned about nonpayment of overdue amount to 1320 MW coal-fired coal power plant at Port Qasim despite a letter from former Prime Minister of Qatar Sheikh Hamad Bin Jasim Bin Jaber AI Thani.
The Finance Ministry, in a letter to Power Division referred to Prime Minister’s Office’s letter of May 15, 2024 along with a self-explanatory letter from Sheikh Thani to the Prime Minister and subsequent reminder of July 24, 2024 wherein it was stated that his company has not received any dividends on account of delay in the payment of receivables.
According to Finance Ministry, the matter is related to CPPA-G payables towards CPEC IPPs, Port Qasim Power Plant being one of them where Qatar has shareholding of 49%.
The payables of CPPA-G towards CPEC-IPPs as of June 3, 2024, stood at Rs.477 billion. The total receivables of Port Qasim Electric Power (coal) for the same period are around Rs.82 billion.
The Finance Ministry further stated that the matter of clearing payables of CPEC plants was raised before Prime Minister’s visit to China. Finance Division promptly released funds amounting to Rs.227 billion (AJK Rs.50bn, KE-arrears Rs.70bn & KE-TDS Advance Rs.102bn) before visit of Prime Minister in May, 2024. This additional liquidity to power sector was utilized to settle the CPEC-IPPs receivables to the extent of Rs.158 billion.
Copyright Business Recorder, 2024
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