The dollar crisis in Pakistan has amplified the money troubles faced by Chinese Independent Power Producers (IPPs), as the government deducts capacity charges due to their inability to produce the desired amount of electricity.
The Chinese IPPs may have to initiate force majeure against the government’s deduction of capacity payments.
During an official meeting on Monday, they claimed that they had imported coal or fuel to power their plants, but that the government was not providing the dollars as agreed due to the lingering liquidity crisis. As a result, Chinese IPPs will face capacity payment charge reductions, reported a national daily.
The IPPs intend to invoke force majeure to avoid capacity payment deductions. The issue has become more contentious as smaller IPPs have been able to import coal or fuel and have questioned why they weren’t allowed the same. Faced with prevalent issues, civil officers have been hesitant to accommodate genuine and justified demands of foreign IPPs for fear of causing another controversy.
The power producers have also brought up the issue of the spiraling circular debt, which is between Rs. 330 billion and Rs. 350 billion. In summary, the government’s capacity payment deductions and the accumulation of circular debt are hurting the IPP business.
A follow-up progress review meeting was held on Monday, at the CPEC Secretariat.
The meeting was held to address the major CPEC projects and the minutes of the 11th JCC meeting. Both parties expressed satisfaction with the timely completion of various CPEC projects and agreed that all outstanding issues would be resolved amicably.Â
power plants running on imported coal?? why??