Government decides to make Rs 50 billion payment to IPPs

21 Sep, 2018

The federal government on Thursday decided to clear Rs 50 billion after independent power producers (IPPs) threatened to suspend electricity supply. Well-placed sources at the finance ministry told Business Recorder that the decision was taken after IPPs told the government that they would suspend power generation if their outstanding amounts were not immediately cleared.
Sources told Business Recorder that a phase-wise payment will be initiated after the Ashura holidays when Rs 34 billion will be cleared and the remaining Rs 16 billion will be released at the end of next month. The sources said that Rs 50 billion would be procured as loans from a consortium of eight commercial banks, adding the amount had been approved by the previous PML-N government, but the banks refused to release the amount after its tenure ended.
The total circular debt in the energy chain as on July 31, 2018 stood at Rs 1.18 trillion, which included Rs 596 billion of debt and Rs 582 billion parked in Power Holding Private Limited (PHPL). Power generation companies owe Rs 8 billion to gas suppliers and Rs 107 billion to oil suppliers while the Central Power Purchasing Agency-Guarantee (CPPA-G) owes Rs 375 billion to independent power producers (IPPs) and Rs 20 billion to nuclear power plants.
The Water and Power Development Authority (Wapda) owes Rs 84 billion to the National Transmission and Despatch Company (NTDC). Since 2013-14, the shortfall in bill collection by the distribution companies has been estimated at Rs 434 billion. Quetta Electric Supply Company (Qesco) is on top of the list with 38% losses. Actual line losses in the power sector came to 18.3%, but National Electric Power Regulatory Authority (Nepra) allows recovery of 16.3%, which resulted in addition of Rs 202 billion to the circular debt.

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