ISLAMABAD - In a blatant mismanagement of the ongoing electricity crisis in the country, the Water and Power Ministry is blocking payments to installed independent power producers (IPPs) in a bid to release advance payments for its favourites rental power plants (RPPs).
Of late two IPPs in the vicinity of Lahore with an aggregate power generation capacity of 250 mega watts are not functioning at all due to non-provision of either fuel or funds agreed under the respective power purchase agreements (PPAs) and subsequent understandings.
According to sources in the Pakistan Electric Power Company (PEPCO previously named as WAPDA), the state-owned power sector monopoly was all for feeding these IPPs under the respective PPAs but the Water and Power Ministry had interfered to halt supply of fuel to them.
Southern Electric Power Company Limited (SEPCOL) plant with the generation capacity of 132 MW and Japan Power of 118 MW capacity are unable to operate their plants as Pakistan State Oil (PSO) has stopped supply of furnace oil to them for over a month now. According to details, these two IPPs have not been functioning for the last couple of years in the wake of different litigation with the PEPCO.
On August 10, 2009, Pak-Kuwait Investment Company facilitated separate meetings of the two IPPs managements with the PEPCO. As a result of the meeting, SEPCOL and PEPCO struck an agreement to restart production while Japan powers demands were not acceptable for the state-owned power monopoly.
As per the agreement of August 10, PEPCO agreed to pay Rs. 300 million as upfront capacity payment one time, besides financing Rs. 600 million for monthly fuel requirement.
Management of the SEPCOL told TheNation that PEPCO paid Rs. 300 million as per agreement and released fuel worth Rs. 200 million on August 17 enabling re-commissioning of the plant on August 21.
Upon determined pursuit by the SEPCOL, the PSO also released rest of the fuel worth Rs. 400 million meeting one months operational requirement of the plant in Raiwind. But the PSO declined to provide any more fuel to SEPCOL for the following month of operation as it was supposed to do under the August 10 agreement. According to the SEPCOL management, the PSO informed them that they were asked to divert their fuel allocations to some other IPPs. Therefore, SEPCOL plant that supplied 120 MW to the PEPCO during the month from August 21 to September 20 again faced closure due to blockade of fuel supply.
Interestingly, the PEPCO Managing Director Tahir Basharat Cheema who has been elevated from the post of WAPDA spokesman for his reported connections with Prime Minister Yousuf Raza Gilani was simply inaccessible for the SECPCOL for over a month now.
According to senior management of the SEPCOL, they had rehired as many as 134 employees to restart the plant. It was highly embarrassing for the SEPCOL management to face these employees who had left their alternative jobs to rejoin their parent companys resurrection.