Ministries issued notices for non-payment to IPPs

September 4, 2012

Resuming the hearing on clearance of circular debt of Independent Power Producers (IPPs) case here on Monday, the Supreme Court issued notices to the secretaries of Ministry of Finance and Water and Power over non-payment of Rs 8 billion to the IPPs as per schedule.

A two-member bench of Justice Nasirul Mulk and Justice Ijaz Ahmed Chaudhry heard the petition moved by eight IPPs against the government. According to the petitioners, the government has failed to pay them dues worth Rs 61.401 billion during the last couple of months, which has badly hurt IPPs” ability to generate power.

The federal government, through the ministries of water and power and finance, National Transmission and Dispatch Company (NTDC), Private Power and Infrastructure Board (PPIB), National Electric Power Regulatory Authority (NEPRA), Water and Power Development Authority (WAPDA), Pakistan Electric Power Company (PEPCO), Central Power Purchasing Agency (CPPA), the State Bank of Pakistan (SBP) and Independent Power Producers Advisory Council have been cited as respondents in the case.

Khalid Anwar, the counsel for IPPs, submitted before the bench that the government had to pay the second instalment of Rs 8 billion to the power companies on August 30, which had not been paid yet. He further said that due to non-payment, the companies were now producing 50 percent power. If the payments are made they would be able to produce 100 per cent electricity, according to him.

An official of the finance ministry said due to financial crisis Rs 8 billion could not be paid on August 30, adding that the payment would be made in 2 to 3 weeks. The counsel, however, said if the government would not pay funds to the power producers then there would be more loadshedding, adding that circular debt was also rising due to the non-payment.

The court observed that due to loadshedding, country”s exports had been adversely affected. The counsel said the looming energy crisis would have devastating impact on the economy already reeling from a series of blows due to reckless governmental actions – some planned and some consequential.

Seeking more time, the counsel for the Ministry of Water and Power Khawaja Tariq Rahim argued that the payment would be made to IPPs by September 8. He said it was the responsibility of the government to provide electricity to consumers. Rejecting the plea of Rahim, the bench observed that it had already given the government enough time payment, but circular debt of IPPs had not yet been cleared. The hearing was adjourned till September 12.