KARACHI: The Independent Power Plants (IPPs), including the one owned by JDW Sugar Mills have received due payments against the electricity sold to the government’s main power grid.
JDW is owned by estranged PTI leader Jahangir Tareen who is a top industrialist and once-close aide of Prime Minister Imran Khan. Tareen, once a close confidant of Prime Minister Imran Khan, is in hot water for his alleged involvement in the manipulation of the sugar industry. FIA has registered multiple cases against him and his son while Tareen and son deny all charges.
JDW Sugar Mills Limited has received Rs816 million as 40 percent of the dues from the government of Pakistan through Central Power Purchase Agency Limited, JDW Sugar Limited said in a statement issued at the Pakistan Stock Exchange on Monday. The breakup of the payment consists of 1/3rd in cash, 1/3rd in form of 10 year Pakistan Investment bonds and 1/3rd in five-year Government Ijarah Sukuk.
After a delay of three months since the payments to the Independent power producers (IPPs) became due as per August 2020 MoUs, the federal cabinet last month accorded approval to the clearance of the first instalment to the IPPs. The government vowed to clear these receivables till June 7, 2021.
Meanwhile, Kot Addu Power, the biggest by production capacity and Kohinoor Energy also said that they have received the first instalment of the due payment.
The power sector has performed particularly poorly 2018-2021 – a charge that is evident as the circular debt today is 2.4 trillion rupees (against Rs1.2 trillion in August 2018) on the back of low receivables for electricity sold, high transmission and distribution losses, and failure to release the budgeted subsidies.
The PM and his cabinet members have placed the entire onus on the agreements signed with the Independent Power Producers (IPPs) during PPP and PML-N tenures that envisage: (i) capacity payments (irrespective of demand and the productive capacity given the steady depreciation of machinery), (ii) a fixed dollar rupee rate that has favoured the IPPs and last but not least (iii) an inordinate focus by the PML-N government (2013-18) on generation without taking account of the capacity of the transmission system to vacate the additional generation or the environmental aspects of the fuel (coal) to be used.
The PPP-led government established a Power Holding Private Limited (PHPL) in 2009 under the administrative control of the Ministry of Energy (Power Division) wholly owned by the Government of Pakistan with the objective of reducing power sector liabilities through borrowing from a financial institution.