Rs135bln paid to 20 IPPs as second installment

The government has released second installment of Rs135 billion to 20 Independent Power Producers (IPPs) against their total outstanding receivables for selling electricity to Central Power Purchasing Agency (CPPA), it said on Tuesday.

The released amount is 60 percent of total outstanding receivables as the government had paid 40 percent in first installment in June this year, thus repaying IPPs dues, accumulated till November 2020, in full.

The repayment of IPPs receivables is part of the government’s drive to reduce circular debt in the power sector as agreed with International Monetary Fund (IMF) for the resumption of a loan programme.

Although, the first installment of Rs180 billon was to be paid to 47 IPPs before May 31, 2021, it was delayed because 12 IPPs, falling under 2002 power policy, were under investigation by National Accountability Bureau (NAB).

The government released the second installment to 20 IPPs of Rs135 billion, equally divided in cash, 5-year Sukuk, and 10-year Pakistan Investment Bonds (PIBs).

After the payment of second installment to IPPs, analysts of power sector believed the payment to IPPs falling under the 2002 power policy would also be made soon.

Yousaf Saeed, Head of Research at Darson Securities, said the payment of receivables would ease the liquidity position of energy sector and the major beneficiaries would be Kot Addu Power Company, Hub Power Company, Lalapir Power Limited, Pakgen Power, and Kohinoor Energy.

“These are listed companies and would receive the major chunk of the amount. Pakistan State Oil (PSO) will also be beneficiary from the released amount as power generation companies owe major portion of receivables to it,” Saeed said.

The release of receivables boosted the share prices of listed companies in the stock market along with PSO, whose share price also witnessed the increase.

According to the details, HUBCO received Rs34.789 billion, KAPCO Rs59.401 billion, Roush Rs8.534 billion, Fauji Rs2.638 billion, Lalpir Power Rs9.290 billion, Pakgen Rs9.802 billion, Kohinoor Energy Rs2.984 billion, Saba Rs1.079 billion, while FFC Energy received Rs2.072 billion.

Besides, ACT received Rs979 million, Artistic Energy Rs1.362 billion, Harappa Rs95 million, AJ Power Rs40 million, RYK Mills Rs314 million, JDW Sugar Mills Unit-II Rs697 million, JDW Sugar Mills Unit-III Rs529 million, Hamza Sugar Mills Rs93 million, Thal Industries Corporation Rs67 million, Al Moiz Industries Limited Rs14 million and Chanar Energy Limited received Rs5 million.

Out of Rs135 billion paid to IPPs as second installment, Rs44.923 billion were paid in cash, Rs44.923 billion in Sukuk, and Rs44.923 billion in PIBs.

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