affanpervez
Minister (2k+ posts)
ENERGY SECTOR: CIRCULAR DEBT AGAIN PEAKS TO RS 157 BILLION
Pakistan 's energy sector circular debt has again peaked to Rs 157 billion three months after Rs 480 billion was settled by the Finance Ministry without audit of Independent Power Producers ' claims. Well-informed sources in Pakistan Electric Power Company (Pepco) told Business Recorder that the government had reconciled an amount of Rs 561 billion in June 2013 of which Rs 480 billion was settled, which implies that only Rs 81 billion remained unsettled.
"Energy sector's overdue receivables now stand at Rs 157 billion, which implies a carryover circular debt of Rs 81 billion and the re-emergence of Rs 75 billion till September 2013," the sources added. National Transmission and Dispatch Company (NTDC) argues that circular debt cannot be eliminated without an increase in gas quota to thermal power plants, conversion of furnace oil fired power plants to coal, increase in hydel generation, fixation of tariff taking account of socio-economic conditions of consumers, improvement in recovery and eradication of power theft.
Official documents submitted by the Water and Power Ministry to the Economic Co-ordination Committee (ECC) of the Cabinet and available with Business Recorder reveal that debt stock of Rs 503 billion was identified after consultations between the IPPs and the Ministry of Finance and an amount of Rs 342 billion was paid to the power generators. Out of this, an amount of Rs 19.10 billion was received as dividend by GoP resulting in total net transaction of Rs 322 billion. The remaining amount of Rs 138 billion has been settled/being settled through non-cash adjustment.
According to the documents, MoU was signed between the NTDC/CPPA and the IPPs on assurance of optimal utilization of available capacity. The IPPs have been asked to ensure optimum of their available capacity which is being largely complied with. The MoU for conversion of four IPPs, i.e., Hub Power Company (Hubco), Lalpir, Pakgen and Saba Power to coal were also signed on June 28, 2013 between the concerned IPPs and NTDC. Further implementation of the understanding is being handled by the Private Power and Infrastructure Board (PPIB).
Different IPPs have approached PPIB for conveying the intentions and understanding of the GoP and power purchaser to Nepra in the light of which the IPPs may approach Nepra for revision in working capital component of the tariff to implement the proposed extension in payment time from 30 days to 60 days.
At the time of Rs 480 billion settlement, an undertaking was given by the IPPs to resolve disputes relating to liquidated damages and capacity payment deduction presently raised by the parties before the Supreme Court, in accordance with dispute resolution mechanism as provided in respective Power Purchase Agreements (PPAs). Of nine IPPs, eight served dispute notice under section 18.2(b) of the PPA and have nominated former Justice Sair Ali as expert for resolution of the dispute between the IPPs and NTDC.
As per section 18.2(b) of the PPA, the notice receiving party has to notify the initiating party whether such person is acceptable or not within 15 days of receiving dispute notice or the responding party shall propose a person to be the expert. The Ministry of Water and Power further stated that the case is under process for approval of Managing Director, NTDC through General Manager (L&CA) NTDC. The IPPs will respond after Managing Director's approval is received in CPPA.
Source: http://www.brecorder.com/top-stories/0/1240039/
Pakistan 's energy sector circular debt has again peaked to Rs 157 billion three months after Rs 480 billion was settled by the Finance Ministry without audit of Independent Power Producers ' claims. Well-informed sources in Pakistan Electric Power Company (Pepco) told Business Recorder that the government had reconciled an amount of Rs 561 billion in June 2013 of which Rs 480 billion was settled, which implies that only Rs 81 billion remained unsettled.
"Energy sector's overdue receivables now stand at Rs 157 billion, which implies a carryover circular debt of Rs 81 billion and the re-emergence of Rs 75 billion till September 2013," the sources added. National Transmission and Dispatch Company (NTDC) argues that circular debt cannot be eliminated without an increase in gas quota to thermal power plants, conversion of furnace oil fired power plants to coal, increase in hydel generation, fixation of tariff taking account of socio-economic conditions of consumers, improvement in recovery and eradication of power theft.
Official documents submitted by the Water and Power Ministry to the Economic Co-ordination Committee (ECC) of the Cabinet and available with Business Recorder reveal that debt stock of Rs 503 billion was identified after consultations between the IPPs and the Ministry of Finance and an amount of Rs 342 billion was paid to the power generators. Out of this, an amount of Rs 19.10 billion was received as dividend by GoP resulting in total net transaction of Rs 322 billion. The remaining amount of Rs 138 billion has been settled/being settled through non-cash adjustment.
According to the documents, MoU was signed between the NTDC/CPPA and the IPPs on assurance of optimal utilization of available capacity. The IPPs have been asked to ensure optimum of their available capacity which is being largely complied with. The MoU for conversion of four IPPs, i.e., Hub Power Company (Hubco), Lalpir, Pakgen and Saba Power to coal were also signed on June 28, 2013 between the concerned IPPs and NTDC. Further implementation of the understanding is being handled by the Private Power and Infrastructure Board (PPIB).
Different IPPs have approached PPIB for conveying the intentions and understanding of the GoP and power purchaser to Nepra in the light of which the IPPs may approach Nepra for revision in working capital component of the tariff to implement the proposed extension in payment time from 30 days to 60 days.
At the time of Rs 480 billion settlement, an undertaking was given by the IPPs to resolve disputes relating to liquidated damages and capacity payment deduction presently raised by the parties before the Supreme Court, in accordance with dispute resolution mechanism as provided in respective Power Purchase Agreements (PPAs). Of nine IPPs, eight served dispute notice under section 18.2(b) of the PPA and have nominated former Justice Sair Ali as expert for resolution of the dispute between the IPPs and NTDC.
As per section 18.2(b) of the PPA, the notice receiving party has to notify the initiating party whether such person is acceptable or not within 15 days of receiving dispute notice or the responding party shall propose a person to be the expert. The Ministry of Water and Power further stated that the case is under process for approval of Managing Director, NTDC through General Manager (L&CA) NTDC. The IPPs will respond after Managing Director's approval is received in CPPA.
Source: http://www.brecorder.com/top-stories/0/1240039/
- Featured Thumbs
- http://cache.pakistantoday.com.pk/2011/09/Debt--480x238.jpg
Last edited by a moderator:
