MoF willing to pay GPPs Rs93.4bn

MUSHTAQ GHUMMAN

ISLAMABAD: Finance Ministry has shown a willingness to pay Rs 93.438 billion to Government-owned Power Plants (GPPs) on the same mode adopted for payments to Independent Power Producers (IPPs), well informed sources in Finance Ministry told Business Recorder.

The total amount of GPP receivables of Rs 93.438 billion will be paid equally as follows: Rs 31.146 billion as cash, Rs 31.146 billion as Pakistan Investment Bonds (PIB) and Rs 31.146 billion as Sukuk, the sources added.

Power Division, sources said, has informed Finance Ministry that out of total amount of Rs 93.438 billion, it plans to clear payable of Pakistan Atomic Energy Commission (PAEC) amounting to Rs43.698 billion, Water and Power Development Authority (WAPDA) Rs 33.636 billion and National Power Parks Management Company Limited (NPPMCL) Rs 16.377 billion against pending claims of RLNG-fired plants.

According to sources, Power Division, in its proposal has sought Rs 93.438 billion as Technical Supplementary Grant (TSG) under investment head A-014 under Power Division demand number 33 and its release as investment in power Distribution Companies (Discos).

For issuance of Sukuk, assets to the tune of Rs 32 billion are currently available, which can be earmarked for this transaction. However, Finance Division should ideally be informed at least one month before the execution of the transaction to earmark the underlying asset and finalizing the issue structure.

However, Finance Ministry argues that funds to be provided through TSG from block allocation earmarked in Finance Division’s demand and TSG may be taken in the overall power sector subsidy demand number 33 for CFY 2022-23 instead of under investment head A-014; and accordingly, fund would be released and booked against outstanding subsidy claims, if any, and current/ advance subsidy claims of zero-rated subsidy.

On October 19, 2022, Strategic Plans Division (SPD), in a letter reiterated that PAEC is facing serious financial challenges due to declining release of revenue payments against monthly billing, adding that despite repeated requests, regular release of revenue has not improved considerably.

Strategic Plans Division further stated that Central Power Purchasing Agency-Guaranteed (CPPA-G) only paid 39.51 per cent of the billed amount in past three months of Current Fiscal Year (CFY).

According to SPD, the amount being released is insufficient to meet the operational/ maintenance expenses of the plants and obligatory contractual payments (fuel, spares and loan).

SPD maintains that insufficient revenue release by CPPA-G may lead to default in repayment of sovereign guaranteed loans and other contractual payments.

Details of PAEC’s liabilities were at Rs 126 billion due to be paid from October 2022 to April as follows: (i) Exim Bank China (Rs 73 billion ($ 330.47 million); (ii) local banks (Rs 7.50 billion); (iii) fuel payment (Rs 38.50 billion); and (iv) O&M expense, Rs 7 billion.

SPD in its letter requested Secretary Power Division to direct CPPA-G to ensure payment of 80 per cent of the billed amount on monthly basis to ensure smooth functioning of base load plans and meet contractual obligations including repayment of foreign loan.

Water and Power Development Authority is continuously writing to Power Division and CPPA-G payment of agreed amount for on payment to provinces as Net Hydel Profit (NHP). The stock of WAPDA’s receivables is over Rs 300 billion, which is also affecting its development projects.