The country's power sector is facing worst financial crisis as the Independent Power Producers are showing teeth to the government, threatening to invoke sovereign guarantees without prejudice, sources in the finance ministry told Business Recorder, here on Wednesday.
Pepco fears that the country's power sector would collapse financially if funds were not arranged immediately to clear partially outstanding bills of oil and gas companies and IPPs, the sources added.
"Over the past few weeks, our efforts to obtain release of pending dues and budget payments, as outlined in our letter of March 1, have been unsuccessful," said Pepco Managing Director Munawar Baseer, in a letter on March 13 to the secretary finance.
Three of the top private sector power suppliers ie Kot Addu Power Company, Hub Power Company and Rousch (Pakistan) have written letters to the Private Power Infrastructure Board, threatening to call back guarantees, the sources added.
Other companies such as Japan Power Companies, AES Lalpir and AES PakGen have failed to keep the requisite fuel stock and were operating at less than one day's fuel on the contention that until their dues were paid, they were unable to order additional quantity of fuel oil.
The PPIB was now being headed by an official who had signed the controversial Power Purchase Agreements (PPAs) with IPPs in 1994. Some of the cases were still pending with the National Accountability Bureau, the sources said.
Pending liabilities of IPPs amounted to about Rs 34 billion till March 12, 2008 of which Kapco's liabilities stood at Rs 9.543 billion, Chashma Rs 970 million, Fauji Rs 570 million, Habib 486 million, Hubco Rs 1.601 billion, Japan Power Rs 119 million, Kel Rs 868 million, Lalpir Rs 2.513 billion, Liberty Rs 1.311 billion, Pakgen Rs 2.397 billion, Saba Rs 1.008 billion, Sepcol, Rs 221 million, Uch Rs 2.097 billion, Rousch Rs 1.706 billion and refund Hubco Rs 7.853 billion.
The liabilities of Oil Marketing Companies stood at Rs 2.822 billion, of which the amount of APL was Rs 1.195, OTCL Rs 694 million, PSO Rs 685 million, Admore Rs 235 million and Shell Rs 13 million.
Pepco has also to pay Rs 20.850 billion to Wapda besides Rs 2.796 billion to gas companies ie Mari, SSGC, PPL, SNGPL, Tullow, OGDCL, ROF and AOC. "We are at a loss as to why the GoP budget tariff differential balance amount of Rs 5.8 billion is held up by the finance ministry," the sources quoted Pepco MD as saying in the letter to the secretary finance.
Further, compounding the situation was the refusal of KESC to make payments or even to submit payment plan for Rs 37.1 billion dues, which was discussed in detail at a high-level meeting on Tuesday, March 18. Pepco also complained that the GoP did not deduct Rs 75.2 billion Fata dues as per executive order.
"With such massive shortfalls in our cash flows it is impossible to meet the current payment requirements with the IPPs, oil and gas companies which have now accumulated to Rs 60 billion," the sources quoted Baseer as explaining the financial position.
He was of the view that release of agriculture subsidy of Rs 0.9 billion by the finance ministry and small payment of Rs 200 million by KESC on intervention of the minister for water and power does not help to any extent in meeting the payment obligations.
Agreeing with the stance of IPPs, Baseer said that the amounts due to IPPs, which were more than past 30 days due, were subject to the sovereign guarantee/calling for Standby Letter of Credit (SBLC) by the GoP. "If the government fails to arrange funding, the entire power sector operations would be at the risk of closure by the IPPs as well as Gencos due to non-provision of oil and gas bills," the sources continued. Kapco CEO Syed Rizwan Ali Shah could not be reached for comments.