ISLAMABAD: Eight Independent Power Producers (IPPs) namely Atlas, Halmore, Liberty, Nishat, Nishat Chunian, Orient, Saif, Sapphire have filed a petition in the Supreme Court for recovery of their outstanding dues amounting to around Rs 62 billion.
"We have filed a petition for recovery of outstanding dues and stopping power purchaser from deducting IPPs payments illegally. As of today, the overdue receivables of these 8 IPPs against National Transmission and Dispatch Company (NTDC) and GoP are to the tune of Rs 62 billion as a result of which these power plants are not able to operate daily up to their full capacities," said one of the representatives of IPPs.
According to him, for the last one year, IPPs co-operated with the government and with the power purchaser in finding a solution to the issue of non-payment. The IPPs went out of their way in September 2011 by executing an agreement which gave flexibility to government and to NTDC for making payments as and when available with NTDC. "It was agreed between the parties that as long as government does not clear all dues of the IPPs enabling the IPPs to purchase fuel and run their plants, the IPPs would remain entitled to capacity payments which need to be paid to (a) lenders for loan repayments; (b) operator for running and maintaining the plant; and (c) insurers and re-insurers for insuring the plant," he added.
NTDC and GoP signed such agreements in September 2011 with IPPs but then deliberately did not extend such agreement after December 2011 leaving the IPPs in limbo. According to the IPPs, there is a Power Purchase Agreement (PPA) where both parties have to fulfil their obligations: the power purchaser has to pay in time and the IPPs have to use that money to keep the plants running.
"If the power purchaser does not fulfil his part of the obligation and does not pay in time and payments are delayed significantly, the IPPs would obviously have no money to buy fuel and pay to the operator since their entire revenue comes from only one source which is NTDC," he continued. In such a case the plants would shut down which is not due to any fault of the IPPs themselves but is due to non-payment by the power purchaser.
Subsequently, when NTDC and GoP stopped making any payments the situation went out of control and the IPPs were compelled to invoke GoP's sovereign guarantee and demand payment against it. "Here again, the GoP took the situation non seriously and defaulted on its guarantee which has massive implications on the sovereign rating of the country," he maintained. According to the IPPs, the GoP and power purchaser left them with no choice and actually forced the IPPs to go to courts.