10 IPPs may close down if dues not paid by April 19

ISLAMABAD: In an alarming development that is likely to worsen the power crisis, 10 Independent Power Producers (IPPs) have served notices on the government against Pepco for defaulting on payment of Rs42 billion, a senior official at the Ministry of Water said.

The IPPs will invoke sovereign guarantees if payments were not made after a 30-day notice period, a representative of the IPPs confirmed, saying they had served preliminary notices on the government for non-payment of dues and told it that 10 IPPs will close down their operations if their dues were not paid till April 19.

Rousch (Pakistan) Power Limited was the first to serve notice some 20 days back. Others include Nishat Chunian, Nishat Power Limited, Liberty Power Tech Limited, Atlas Power Limited, Halmore Power Limited, Saif Power Limited, Sapphire Electric Company Ltd, Orient Power Limited and Saba Power Limited.

These notices have been served at a time when violent protests are being staged against prolonged power outages, particularly in central Punjab, the hub of economic activity. The government, the official disclosed, has withheld normal daily payments (NDP) of some of these IPPs owing to which they are now on the verge of closing down their power plants. In the wake of acute financial constraints, all IPPs are running below 50 percent capacity.

"The government has received notices with regards to non-payment, not sovereign guarantees," was the reply of the spokesman of the ministry of water and power ministry when contacted.

The official said people who are currently facing 8-10 hour load shedding on average across the country (16-20 hours in some parts of Punjab), will have to endure more on account of impending closure of 10 IPPs, which have the capacity to produce 2100 MW of electricity. The country is currently facing over 6000 MW shortfall of electricity.

The arrears of all 28 IPPs have swelled to over Rs330 billion but only 10 IPPs have sought Rs42 billion till April 19. It is pertinent to mention that 9 independent power producers (IPPs) had on August 26, 2011 invoked sovereign guarantees but later on withdrew their notices on government's persuasion.