Import of spare parts: LC: AGL seeks Power Division’s help

M/s Attock Gen Limited (AGL) has sought the Power Division’s help in opening of Letter of Credit (LC) for import of necessary spare parts for periodic and breakdown maintenance of plant.

The company maintains that the delay in the opening of LC is going to hamper the plant’s availability for power generation if remedial measures are not taken immediately.

Sharing the details, the power company said that on July 5, 2022, vide its EPD circular 11, the SBP advised banks to seek prior approval from its Foreign Exchange Operations Department (FOED) for initiating import transactions against items.

Later on, the SBP, vide EPD Circular Letter No. 20 of 2022 of December 27, 2022, withdrew the circular with effect from January 2, 2023. Consequently, requests for import transactions already submitted have been returned.

Alternatively, Section 3 (ii) of EPD Circular letter No. 20 of 2022 dated December 27, 2022 has been provided for energy imports, however it restricts the imports related to only petroleum group (oil and gas) and coal (for power projects-based upon merit order of Ministry of Energy). Whereas, there is no mention of other essential imports of spare parts etc. for the repair and maintenance of power plants.

Attock Gen Limited (AGL) is currently above some coal plants in the latest merit order of December 31, 2022. Furthermore, AGL is producing power through indigenously sourced RFO being produced by Attock Refinery Limited.

The non-availability of spare parts due to above LC restrictions will result in stoppage of AGL plant; and consequently national grid will have to procure more expensive power than that available through AGL. Section 10.4 of the Implementation Agreement (IA) ensures timely availability of required foreign exchange for the requirement of the Company.

The company further contends that regular import of spare parts is required for periodic and breakdown maintenance of plant and machinery, adding that due to these earlier and newly imposed restrictions, requests for opening of LC’s have not been approved by the SBP till now.

“The maintenance is getting due one after another and if we are not granted approval by SBP on most urgent basis we will not be in a position to keep our plants fully operational which will result in shortfall of generation for the National Grid or switching to expensive generation,” said Adil Khattak CEO AGL in a letter to Secretary Power Division.

AGL further stated that “neither our technical limit nor the prudent utility practices allow to delay regular maintenance and major overhauls because it has serious consequences to performance of engines. Furthermore, this may also make the machinery breakdown insurance void.”

The power company has requested Secretary Power Division to take up this matter with the SBP on most urgent basis and facilitate in resolving the L/C issues.

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