ISLAMABAD - Owing to the heavy default coupled with irrational demands on the part of cash-starved federal government, the Independent Power Producers (IPPs) are found unable to produce more electricity to cope with worsening power shortage in the country.

In response to the Thursday’s directives issued by the SC, the eight IPPs submitted their written reply in the court on Friday in response to the statement of the Ministry of Water and Power joint secretary (power) regarding the non-payments to the power producers.

The IPPs in their statement said the National Transmission and Despatch Company (NTDC) was the sole source of revenue for an IPP. “If NTDC fails to make payment in time, it is obviously impossible for an IPP to make available electricity for supply to NTDC. However, this is the precious demand of NTDC.”

The statement says, “Firstly, it demands every IPP should make available electricity whether or not it has received any payment and secondly in the event that electricity is not made available by an IPP due to the failure of NTDC to make timely payment it penalises the IPP by reducing capacity payments. Thus a double burden is imposed on an IPP. It is both denied past due payment and also punished by disputing and withholding of capacity payments.”

The statement further says, “In other words, the NTDC need not pay the principal amount so long as interest keeps accruing (though not paid) but still expect an IPP to continue making available energy without any financial resources. This is a sure recipe for taking an IPP into liquidation,”

It added that the NTDC neither provided any financial relief to an IPP and nor did it enable an IPP to continue to supply electricity without any liquidity.

Sources say the installed capacity of IPPs is 8,500 MW; however, they are producing around 6,800 MW of power. This difference is only because of delayed payments to the IPPs by the government.

It is also learnt that o the payment-related differences between IPPs and NTDC over payments is expected to result in excessive loadshedding because the repeated and persistent default of NTDC would create difficulties for the banks, making them stop lending to the IPPs, which had already arranged the requisite working capital.

Furthermore, the admitted liability of the federal government is Rs 44.938billion as of July 7. Since then, the liability has been enhanced further and will continue to rise if the government persists with the present policy.

The statement further contradicted the viewpoint submitted by the ministry before the court about the NTDC currently making monthly payments to the IPPs ‘in accordance with the provision of the law’.

“It may also be clarified that the attempts by the government to minimise the effect of the financial crisis by referring to the balance sheets of the IPP’s is also deliberately misleading since the government is well aware of the fact that balance sheets are prepared on the basis of the legal entitlement of the IPP’s to receive the amounts due to them,” the IPPs said.

It is worth mentioning that a three-member bench, headed by Chief Justice Iftikhar Muhammad Chaudhry, is hearing the petition moved by the IPPs against the government, praying that the government had failed to pay them the dues worth Rs 61.401 billion during the last couple of months, which worsened the power crisis in the country. The apex court has adjourned the case till August 15.