Kot Addu Power Company (KAPCO), the largest private power producer by capacity, joined the agreed power producers’ list on late payments, surcharge rates, and heat rate efficiency, KAPCO disclosed in a notice to the Pakistan Stock Exchange (PSX) today.

According to the notice, the payment of overdue receivables is an integral part of the agreement. The payment mechanism of the company’s overdue receivables is in the process of being finalized, with instalments comprising cash and other financial instruments, reads the notice.

On the payment of the said receivables, Late Payment Surcharge (LPS) on future invoices will be lowered to KIBOR + 2.0% for the first 60 days and then shall revert to KIBOR + 4.5% as per the power purchase agreement, while ensuring that payments follow the agreement mandated FIFO payment principles for this rate to be effective. The rate shall be changed from the current rate of 15% in US dollars to 17% in Pakistani rupees, with no future US dollars indexation, and the US dollar equity shall be converted to Pakistani rupees using exchange rate rupees to US dollars of 148. However, the current indexation shall continue to be applied until the date the applicable exchange rate under the present Tariff reaches rupees to US dollars of 168.

Furthermore, regarding the full implementation of the Competitive Trading Arrangement, subject to mutual agreement between the parties, the plant will move to take and pay basis. KAPCO announced an agreement on late payments, surcharge rates, and heat rate efficiency with Central Power Purchasing Agency Limited, a public sector power purchasing company. Around 35 other power producers also agreed to the terms that opened up avenues to end circular debt deadlock for the energy and oil sector, sources said.

Pakistan, facing a power production deficit, has to rely on private power producers to bridge the gap between supply and demand. The country is also struggling to keep its cost of production for industries, such as textile, to compete in the export market.


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