Pinning high hopes on the PTI-led government, the Independent Power Producers (IPPs) are looking forward for resolution of their serious financial crisis on account of overdue receivables from NTDC/CPPA.
The IPPs, which are approximately 50% of the power producers within the industry, have the verified and audited over dues of approximately Rs 248 billion as of July 15, 2018, in respect of 21 members of the Independent Power Producers Association (IPPA), sources said. "Issue is of sales tax refunds related to the difference in the rate of input and output GST (17% vs. 20%) is still pending." Although, the IPPs are cost neutral and power purchaser has to repay to IPP any of the change of tax consequence. Resultantly consumers will bear the further load in shape of cost increase.
Also, the source added, the IPPs are expecting the resolution of an old dispute regarding the withheld amounts by NTDC. It is to be noted that in 2017 the London Court of International Arbitration ruled in favor of the IPPs and awarded Rs 14bn in respect of unduly withheld amounts by the NTDC in 2011-2013 to 9 IPPs. Hence, a committee was formed by the then government to deliberate and reach an amicable resolution on the matter. "Currently, there is no progress on the negotiations and the arbitration award is pending enforcement through high court as award was a foreign award, said the sources.
In order to get their issues resolved, the IPPs are willing to work with the new government. "The ministry of energy should eliminate, or at least substantially reduce, the overdue balance to enable the IPPs to sustain operations," said the source. "In case of sale tax apportionment, the government has to decide whether to absorb such deductions or to pass these on to the consumers through increased tariff. However, contractually, any differential does not reside with the IPPs," said the sources.