KARACHI: Thar Power project has demanded immediate release of receivables worth Rs 28 billion from Central Power Purchasing Agency Guarantee (CPPA-G) to meet looming debt payments and other operational expenses.

Engro Powergen Thar Ltd (EPTL) and the Sindh Engro Coal Mining Company (SECMC) in a letter to the Central Power Purchasing Agency Guarantee (CPPAG) urged to immediately release some Rs 28 billion receivables to meet upcoming debt servicing requirements of Rs 30 billion in the first week of June 2023.

Wang Pu, Chief Financial Officer of EPTL, has mentioned in the letter that overall receivables from CPPAG have reached at an alarmingly level of approximately Rs 68.8 billion, with Rs 60.3 billion overdue. Due to delay in the payment of receivables, the power producer is facing a severe liquidity crunch, making it increasingly challenging to settle liabilities with lenders and suppliers.

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Making a reference to previously held meetings and formal letters, Wang mentioned that EPTL had already informed CPPAG about the upcoming debt servicing requirements amounting to Rs 30 billion due on June 1, 2023. “We have received only Rs 2.02 billion on account of debt servicing from our initial letter dated January 26, 2023, and we urgently require at least Rs 28 billion to avert default on the debt servicing requirement by June 01, 2023,” he added.

Between February and April this year, this is the sixth time that EPTL has flagged the receivables issue to CPPAG and demanded urgent support to ensure successful payment of debt obligations before the due date.

The Rs 28 billion amount required for debt servicing is in addition to the regular payments necessary for sustainable operations of the power plant, including fuel, operation and maintenance costs, and insurance, which amount to approximately Rs 7 billion per month.

He urged the CPPAG to immediately release the pending amount to ensure timely payment of debt obligations, ie, by June 1, 2023. Sources said that if the required amount was not released timely, it may delay the debt servicing and other regular payments necessary to sustain the power plant’s operations, such as fuel, operation and maintenance expenses and insurance.

Copyright Business Recorder, 2023