IPPs paid Rs 322b to end circular debt

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ISLAMABAD- The government has paid Rs 322 billion to independent power producers (IPPs), completing the first phase to eliminate the circular debt, which will increase power generation and reduce the long-hour electricity outages.


 

Spokesperson for Finance Ministry Rana Asad Amin told The Nation that the government paid Rs 322 billion to the IPPs till Saturday as decided by Economic Coordination Committee (ECC) of the cabinet the other day.


Earlier, a deadlock surfaced between the finance ministry and the IPPs over the payment mechanism, which was resolved on late Friday night as nine independent power producers agreed to withdraw their cases from the Supreme Court in five working days. The sources said duration of loadshedding might slightly come down in the days to come. The IPPs have signed a memorandum of understanding after receiving the money. According to the MoU, the IPPs have agreed to achieve their maximum generation capacity and would add 1,500mw to 1,700mw electricity to the national grid before the start of Ramazan.


The remaining amount of Rs 158 billion would be cleared before 10th of August. The ECC was informed that total circular debt was around Rs 480 billion.


It might be mentioned here that nine IPPs (those that installed plants in 2002 refused to sign any MoU on Friday for getting their due amount as the government asked those IPPs to withdraw their cases from courts, which was not acceptable to them. However, later, they accepted the government’s stance and decided to withdraw the cases after holding intensive negotiations with the government on late night Friday.


They sources said the IPPs accepted the government’s demand to increase power generation by 1,500 to 1,700 megawatt before Ramazan. The IPPs also accepted the government’s demand regarding increase in credit period from one month to 60 days. The sources said an MoU had also been signed regarding the conversion of four thermal power plants to coal. The four IPPs, Hubco, Lalpir, Pakgen and Saba Plant, have agreed on conversion to coal in two years.





Courtesy:   Nation


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