ISLMABAD: Ministry of Water and Power has reportedly failed to resolve outstanding payment issues of Independent Power Producers (IPPs) due to financial constraints, well informed sources told Business Recorder. The sources said, 235 MW TNB Liberty Power Limited has served notice of intent to terminate agreement with GoP with the timeline of March 28, but Additional Secretary Incharge Ministry of Water and Power Rai Sikandar gave personal assurance to resolve the issue of the power plant.
The outstanding amount of TNB Liberty Power Limited is Rs 11.87 billion and of Rousch Pakistan Power Limited (RPPL) is Rs 12.95 billion. The plant is operational but called upon the GoP guarantee twice this year. The outstanding amount of Saba Power Company Limited is Rs 1.38 billion. The plant is non-operational due to fuel shortage and disputes with power purchaser whereas outstanding amount of Altern Energy Limited is Rs 736.6 million.
Saif Power, an IPP with a gross capacity of 225 MW supplying electricity to national grid, argues that it is unable to procure fuel and does not operate at its full capacity. The company is unable to service its debt to the syndicate of lenders. A default has already occurred for one quarter; another default is nearby and subsequent to which company may be reported in CIB with SBP. So far, sponsors had been giving additional loan to the company to sustain the debt servicing but now it has stopped as funds have been exhausted; it cannot access indefinite funding without receiving anything back from the power purchaser. Sponsors have not been able to receive a single rupee of dividend during three years of plant's commercial operations.
Sponsors have put up a substantial equity of $60 million in this project with an objective to sustain group's operations through dividends of this company. As it is now, the entire group is facing cash crunch on account of such receivables in Saif Power. "It is perhaps for the first time in Pakistan's history that GoP failed to honour its sovereign guarantee," the sources quoted Saif Power as saying in a letter to the Finance Minister.
According to Chairman Saif Group, Javed Saifullah Khan, company's woes have been further compounded with recent damage to its turbines. As per reports of GE International Laboratory, the turbines have been damaged due to frequent stops and starts by the power purchaser (sometimes three stops and starts during a day) combined with a low and fluctuating frequency on the national grid. These machines are very sensitive and were installed as base load machines but are being used as peaking units to the detriment of the sponsors and the country as this plant is also a national asset. This loss is estimated at $15 million which company may recoup only partially due to high deductibles in its insurance policy; not only is P&L position bad but the cash crunch is extreme.
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