LAHORE - The Independent Power Producers (IPPs) have decided to go slow upto 6 to 7 per cent in generation of electricity to press their demand of advance payments besides the payment of their overdue arrears, sources told The Nation here on Tuesday. The sources said that the IPPs have conveyed to the Pakistan Electric Power Company (PEPCO) time and again to clear their outstanding dues, which they (IPPs) said have been hindering their timely production of electricity. They said that the IPPs were required to maintain their oil stocks, however, most of the small IPPs were finding it hard to maintain the reserves owing to the delay in payment from PEPCO. IPPs were also waiting for resolving the pending issue of Central Power Purchase Agency (CPPA), which was yet to be established to manage electricity trading, physical dispatch and financial settlement, they added. They said that CPPA was supposed to be the single buyer, performing the trading and settlement functions, while NTDC would continue to undertake dispatch, according to prescribed rules. On the other hand, the sources said that with 9 per cent rise in electricity prices as announced by NEPRA and its burden to be shifted towards the consumers, PEPCO's revenues would experience an improvement of around Rs 25 billion on yearly basis. They said that this would improve WAPDA's financial health and could help the entity in paying off its outstanding dues to the IPPs, which are currently relying mainly on short term borrowings to plug their working capital gap. The sources said that gross electricity generation in fiscal 2007 stood at 98,213 GWh, depicting a growth of 4.9 per cent primarily due to better load factor by IPPs in order to meet the rising electricity demand in the country. In terms of fuel mix, gas remains the primary contributor to thermal power generation with consumption of 8.6million - 56.5 per cent of total energy consumed in thermal power generation. However, during the last three years, we have witnessed a major shift from gas to oil consumption for power generation. In fiscal 2004, gas met 75.2 per cent of energy requirement by thermal power generation, whereas oil had a share of 24.4 per cent, which has now shifted much in favour of oil as its contribution has surged to 43.5 per cent, reducing gas share to 56.5 per cent. 'This shift has taken place primarily due to restricted gas supply in the country forcing the power sector to increase its reliance on petroleum products, especially furnace oil'. However, sources said that the rupee and US dollar parity put its effect on project returns of IPPs fixed under pre-determined Power Purchase Agreements (PPA) under which the ROE component of the Capacity Payments (CPP) is indexed to currency parity with escalating pace of rupee depreciation against US dollar. They said that there were expectations that CPP of IPPs would rise following the higher indexation factor improving their bottom lines.