Mode of payment of PPIs: the Ministry of Finance is ready to pay the GPPs 93.4 billion rupees

ISLAMABAD: The Ministry of Finance has shown willingness to disburse Rs 93.438 billion to Government Owned Power Plants (GPPs) in the same mode adopted for payments to Independent Power Producers (IPPs), sources said knowledgeable at the Ministry of Finance company registrar.

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

The energy division, according to sources, has informed the Ministry of Finance that out of a total amount of Rs 93.438 billion, it plans to discharge the debts of the Pakistan Atomic Energy Commission (PAEC) from a amount of Rs 43.698 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 Power Plants .

According to sources, Power Division in its proposal requested Rs 93.438 billion as a Technical Supplementary Grant (TSG) under Investment Leader A-014 under Power Division Application Number 33 and its release as an investment in electricity distribution companies (Discos).

For the issuance of Sukuk, assets amounting to Rs 32 billion are currently available, which can be allocated to this transaction. However, the Finance Department should ideally be informed at least one month before the execution of the transaction to allocate the underlying asset and finalize the issue structure.

However, the Ministry of Finance argues that funds to be provided through TSG from the block allocation provided in the Finance Division and TSG application can be taken from the sector block grant application. electricity number 33 for CFY 2022-23 instead of under investment heading A-014; and accordingly, funds would be released and applied against pending grant applications, if any, and current/planned zero-rated grant applications.

Payments to Chinese IPPs: CPPA-G seeks Rs100bn

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

The Strategic Plans Division further stated that the Central Guaranteed Electricity Purchasing Agency (CPPA-G) paid only 39.51% of the amount billed in the last three months of the current fiscal year. (CFY).

According to the SPD, the amount released is insufficient to cover the operating/maintenance expenses of the plants and the obligatory contractual payments (fuel, spare parts and loan).

The SPD argues that the CPPA-G’s insufficient release of revenue may lead to default on state-guaranteed loans and other contractual payments.

Details of CEAP liabilities amounted to 126 billion rupees payable from October 2022 to April as follows: (i) Exim Bank China (73 billion rupees ($330.47 million); (ii) local banks (7.50 billion rupees); (iii) fuel payment (38.50 billion rupees); and (iv) operation and maintenance expenses, 7 billion rupees.

In its letter, the SPD requested the Secretary of the Food Division to order CPPA-G to ensure the payment of 80% of the amount billed on a monthly basis to ensure the proper functioning of the load plans. basis and to meet contractual obligations, including the repayment of the foreign loan.

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

Copyright Business Recorder, 2022

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Elaine R. Knight