Circular debt, amounting to Rs 210billion, was required to be settled down to ensure Independent Power Producers' (IPPs) optimal generation and to end energy crisis in the country, said Hub Power Company's Chief Executive Officer, Khalid Mansoor. At a corporate briefing arranged by BMA Capital Management Limited for Hubco on Tuesday, Mansoor shared his views about the power sector with investors. He particularly discussed issues with the power sector, in general and Hubco, in particular.
Talking about circular debt, CEO Hubco said PML-N led government, after assuming office, cleared off Rs 480 billion circular debt in June, 2013. The action was widely praised by the stakeholders, but re-emergence of the `beast' has raised worries for the IPPs. "The total overdue receivables of the IPPs have again reached an alarming level of Rs 210 billion, while Pepco receivables are as high as Rs 500billion. The circular debt needed to be settled down to ensure optimal generation by IPPs to reduce the gap between electricity's demand and supply", he added.
By entitling coal as the future of power generation in Pakistan, he appreciated that the government has been able to identify the root cause of circular debt, the significant difference in cost of generation and selling price per unit. However, he was of the view that government should consider the matter with utmost priority and should urge interested power companies to achieve financial close. Along with the local investors who are pleased by the attractive tariff for coal generation, Chinese EPC contractors are also showing keen interest in coal projects in Pakistan, he mentioned.
He said that during the outgoing financial year, Hubco reported lower efficiency due to frequent forced closures. To deal with the efficiency issue in the longer term, the management has been conducting extensive overhauling to enhance efficiency of the generation fleet as well as considering adding certain additives to fuel in order to enhance efficiency, he added. Later, he disclosed that it has been more than a year since Company's 75 per cent owned subsidiary Laraib achieved commercial operations of its 84MW hydro power project.
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