Pay arrears or get ready for more power cuts, IPPs to govt

* Power producers warn non-payment of Rs 300 billion circular debt can result in low production of electricity and load shedding of 12-14 hours a day in summer

ISLAMABAD: The circular debt, which has again risen to a hefty Rs 300 billion, might trigger power outages of 12 to 14 hours a day in the near future, as the independent power producers (IPPs) have expressed their inability to generate power at full capacity this summer.
Raising their voice against the staggering circular debt, the IPPs, in a letter to the government, said, “In view of this serious liquidity crunch, IPPs would not be able to generate power at full capacity, and due to a huge increase in demand in the summer, the shortfall will substantially increase, and as a result the load shedding could hit 12-14 hours a day.”
“In view of this serious liquidity crunch, IPPs would not be able to generate power at full capacity and due to huge increase in the summer demand, the shortfall will substantially increase and as a result the load-shedding could hit 12-14 hours a day,” IPPs letter said. It further said that this situation is not only affecting the industry and economy but also giving a very negative signal not only to potential future investors and bankers who are being courted to fund the much-needed additional power generation projects.
Sources in the Water and Power Ministry confirmed to Daily Times that the IPPs have sent a letter to the ministry and raised their due concerns about the burgeoning billion rupees dues. They added that the IPPs have asked for immediate action to clear overdue arrears. Sources in the IPPs also confirmed this development. Quoting the letter, they also said the government needed to realise the importance and urgency of taking immediate action by clearing the overdue amount of all the IPPs without any further delay and keep retiring the circular debt frequently till the structural adjustments which have been started by the present government start yielding results.
The sources also said that the IPPs have also told the government that many companies are likely to default on their bank loans because of non-payment by the National Transmission and Dispatch Company (NTDC). The IPPs have said that the cost of power generation is increasing the need for subsidy. During 2012-13 when NTDC/PEPCO did not make payments on time, and as a result IPPs were shutting down, NTDC/PEPCO imposed penalties as a violation of the agreement, and this matter is already before an arbitrator. The IPPs say the imposition of more penalties will only result in serious legal complications and force them to invoke their legal rights to protect themselves against being forced out of business. 

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Aaj Kal