LAHORE (PPI) - With electricity tariff rates put on hold for last several months, government is bearing a subsidy of Rs15-16 billion a month. And due to recent surge in international oil markets led by concerns in Middle East and North Africa, investors are worried that subsidy on electricity may further accumulate. The problem with NPL is that the company is not able to pass on the circular debt unlike other IPPs (Hubco & Kapco) since it has private fuel supplier like Shell Pakistan. Since government is not paying full amount of the electricity which NPL produces, companys receivables have gone upto Rs6.3b as of Dec 2010 compared to Rs4.4b as in Sept 2010. Thus, concerns are high that Wapda which paid only 30 percent of the sales in 2QFY11 may reduce its payments to NPL in coming months when oil prices are continuously rising. On the other hand, if compared to other IPPs Hubco and Kapco which have state owned fuel suppliers they are passing on the circular debt by not paying to these entities. Thus their net receivables (receivables less payables) are not accumulating. According to experts, another fear that investors have in their minds is that NPLs reported earnings is not recurring and may vary going forward. Apart from guaranteed 15 percent dollar IRR, the earnings is also contributed by the fuel efficiency gain which will keep divided payout on the higher side. For NPL, the tariff is designed in a manner that it has to maintain specific fuel efficiency throughout the plant life i.e. 25 years. Amongst such efficiency parameters is furnace oil (FO) usage per kilo watt hour (kw/hr). NPLs energy cost is designed after taken into account 196 grams of FO to produce 1Kwh of electricity. Thus, in initial years the efficiency might be higher but gradually reduces after few years. The company successfully passed its efficiency run by producing a single kwh with 190 grams of FO, saving cost of 6 grams of FO. This may vary depending upon the usage. Though the company has posted attractive earnings so far but not yet paid any interim dividend. Thus, investors are worried about the timing of dividends whether the company will skip dividend in first year of operation or not. According to our discussion with the industry sources, there is no such limit defined in the PPA (Power Purchase Agreement) that NPL cannot announce dividend in its first year.