Engro Powergen Urges CPPA-G to Help Settle Rs. 65 Billion Dues or Risk Default

Engro Powergen Thar Private Limited (EPTL) has asked the Central Power Purchasing Agency Guarantee Ltd (CPPA-G) to immediately settle its outstanding dues of Rs. 65 billion in order to save EPTL from default on upcoming Debt Obligation.

“We are facing a severe liquidity crisis, imperiling our ability to meet imminent obligations to lenders and suppliers (including fuel supplier),” stated EPTL in a letter to CPPA.

At the start of April, EPTL vide letter (ref. EPTL-2642-04/2024) informed CPPA-G about the upcoming debt servicing obligations of EPTL and SECMC (Thar Coal supplier) which were becoming due in May-end.

“And requested payment of at least Rs 42 billion to manage the Debt Servicing obligations as well as operational requirements, considering the fact that EPTL is a top-3 Merit Order plant operating at high load factors during peak summers and being a key constituent of thermal base load throughout the year,” the letter stated.

Yet, as of May 24th, the EPTL has received only Rs. 17 billion against its request for a total disbursement of Rs. 350 billion to power producers during this time.

“This is not even sufficient to fulfill the debt requirements of EPTL and SECMC. This situation represents an unprecedented crisis for us, with our urgent plea to avert potential debt default being not given due importance,” stated in a letter.

It is pertinent to mention here that EPTL is in a precarious situation with outstanding dues from CPPA-G having surged to 76 billion PKR, with 65 billion PKR overdue while one year ago (on 31st May 2023) the EPTL’s overdue receivables were Rs 39.5 billion.

“This staggering increase in overdue receivables has resulted in EPTL’s recovery percentage dropping to 86% compared to 89 to 90% that has been historically maintained for CPEC projects by CPPA-G (Our YTD recovery percentage for 2024 is a mere 75%),” the letter stated.

The company asked the CPPA-G for immediate attention to expedite the clearance of EPTL’s overdue receivables and ensure the immediate payment of at least an additional Rs. 15 billion to EPTL by May 29th to ensure successful debt servicing.

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