ISLAMABAD: The country’s entire energy sector is still in hot waters due to its financial woes, and mismanagement on the part of Ministry of Energy (both Petroleum and Power Division), which also administers nuclear energy power plants.
Official documents and background interaction with officials dealing with energy sector indicate that financial position of the sector has already deteriorated.
Strategic Planning Division (SPD), which deals with Nuclear Power Plants (NPPs), has written a letter to Power Division, stating that payment is not being released by Central Power Purchasing Agency- Guaranteed (CPPA-G) as per monthly billing in respect of Chashma-1 to Chashma-4 and K-2 NPPs. The outstanding dues of NPPs have increased by over 300 per cent during PTI government. “Due to lesser payment, outstanding receivables have increased exponentially from Rs 27 billion in 2018 to Rs 112.69 billion as on December 1, 2021,” said Strategic Planning Division.
The letter further stated that during the FY 2020-21, only 48.50 per cent of the billed amount was paid by CPPA-G which is not sufficient to meet the requirements. Moreover, Rs 7.04 billion (37.60 per cent of monthly billing) has been released during November 2021. “Obligatory contractual payments (fuel/ spares) to foreign contractors and operation/ maintenance expenditures are required for the smooth operation of plants,” SPD said, requesting Secretary Power Division that CPPA-G may be instructed to keep the receivables balance around Rs 30 billion to ensure smooth functioning of base load plants and repayment of K-2/K-3 sovereign loan.
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Trial generation from K-3 is expected by February 2022. However, issues related to power evacuation from K-3 requires attention on 500-KV Port Qasim- Matiari transmission lines whose pace of work is extremely slow. Till December 1, 2021 only 42 per cent of the work has been completed due to various disputes between NTDC and contractor. According to SPD, delay in availability of transmission lines may result in financial penalties and adversely impact the project.
Secretary Power Division has been requested to intervene for priority completion of 500KV Port Qasim- Matiari transmission lines so that these are available by February 2022 for power evacuation (1100 MW) from K-3 plant. Other Chinese power plants, which are in operation are continuously writing to the Federal Government for payment of their overdue amounts, which according to them is a source of serious concern to Sinosure – the Chinese insurance company.
Finance Division, the sources said, has refused to provide additional budget of Rs 444.50 billion, maintaining that at this stage it is difficult to arrange due to tight fiscal space, as well as, being under International Monetary Fund (IMF) program.
The sources said Finance Division has requested Power Division to reschedule or reduce the requisite amount and payments may be considered in instalments during FY 2022-23 after provision of budgeted allocation.
Power Division has not yet made payments of agreement amounting to over Rs 50 billion to Independent Power Producers (IPPs) as 40 per cent of their first instalment.
The energy sector circular debt has already reached Rs 2.419 trillion during July-October 2021-22 as compared to Rs 2.311 trillion during the same period of 2020-21.
Local refineries have also raised alarm on furnace oil stocks as the power sector has almost stopped upliftment.
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The sources said that the continued non-upliftment by the IPPs/ Gencos is disturbing the entire supply chain resulting in losses due to demurrages and inventory carrying cost besides making it difficult to operate refineries at full capacity throughout the chain which is affecting the supply of other major petroleum products whereas the IPPs are required to maintain at least 15-20 days’ stocks.
PSO has also requested that the power plants may be directed to maximize their inventory and to make upliftment as per the demand given to PSO for the month of December 2021against LC/advanced payments.
One cargo carrying over 68,000 MTs of HSFO is still waiting for berthing for the last one month and Petroleum Division has already forwarded letters from PSO, PARCO and NRL with the request to direct the power plants to uplift furnace oil immediately for stock build-up and provide payments/LCs.
Refineries are facing severe ullage issue as the upliftment of HSFO by the power plants has been almost negligible. PARCO, ARL, and BYCO have been complaining of severe ullage issues which will resultantly affect the supply chain of other petroleum products in case the upliftment by the power plants is not enhanced as the throughput of the refineries might be curtailed.
PARCO, in its letter has further stated that they have already taken steps for exporting a parcel of around 50,000 MTs by first week of January to sustain refinery operations.
Copyright Business Recorder, 2021