ISLAMABAD - The government would have to pay for the electricity it procures from the Independent Power Producers (IPPs) ,otherwise, it would not be possible for the IPPs to maintain power generation and especially during Eid days and the masses might suffer due to government negligence. Abdullah Yousaf while briefing Press on behalf of Independent Power Producers Advisory Council said that this business style does not exist anywhere in the world that one procures something and doesnt pay in return or delay the payments unjustifiably. He also said that these IPPs have reached to their saturation point and cannot generate energy without any financial assistance or funds clearance from the government. He also stated that electricity has become so costlier due to certain factors. 'Historically the fuel mix for power sector was 70 per cent hydel and 30 per cent thermal which kept the cost of electricity at the lowest level, he said. Over the year unfortunately this equation has reversed and presently almost 70pc electricity is through the thermal system and 30pc from hydel. Cost of hydel electricity is almost Rs 1/kwh, gas fuel costs almost Rs 4/kwh and then Furnace oil fuel cost is about Rs 12/kwh and the diesel based around Rs 16/kwh, he added. Due to ever increasing oil prices in international market, cost of electricity particularly over the last 3 years has shot up substantially. Despite the increase in price of electricity over the period, there is still a cost differential of almost Rs 2/kwh which the government is supposed to pay as subsidy, Yousaf stated. Presently this amount is estimated around Rs 190 billion per annum, he said. 'On the other hand due to various structural and governance issues of PEPCO there is almost an additional cash flow deficit to extent of Rs 170 billion as reported last year. He further said:'both these above factors are causing a huge strain on the government resources and in the last 3 years the government has picked up almost Rs 1 trillion. Now we are looking at an overdue amount of all the IPPs of Rs 211 billion which is payable by PEPCO. The overdue amounts are stretching from 2 to 9 months. Out of this amount due to HUBCO and KAPCO is around Rs 130 billion and the balance for all other IPPs is amounting to Rs 81 billion. In the case of HUBCO and KAPCO their fuel supply is provided by PSO on credit basis so whatever fuel is made available to them is processed and electricity produced and supplied accordingly, he stated. 'Bulk of Rs 130 billion is actually payable to PSO. For all others IPPs, they have to make their own arrangements. They have exhausted their limits with the banks who are not agreeing to enhance their limits any more due to over exposure of the entire power sector, he added. Therefore they do not have ability to procure fuel which has to be paid in advance as they are already defaulting on their loans, he said. He said that consequently 9 IPPs have on Friday served notices on the government calling for the Sovereign Guarantee. These IPPs have a dependable capacity of almost 1800 mw and on the other hand they have a total overdue amount of Rs 31.10 billion which has to be paid within the next 30 days, he added. 'In the immediate term the government will have to pick up this liability and the liability of the other IPPs together with funding money to PSO which is also in desperate position and is constrained to stop supplies of oil to HUBCO and KAPCO because they are unable to open L/cs. But at the same time the government also needs to ensure that PEPCOs receivables are collected both from the public and private sector and the present situation of non-recovery cannot continue. In the absence of the much needed each injection of by GoP there is a serious threat of plant closures due to reason mentioned above, he said. The IPPs Committee has made recommendations for the medium and long term solution which proposes some basic structure changes and need consideration of the Government, he stated. Moreover, the Government also needs to rethink allocation of gas to the power sector on priority basis over others as the efficiency of the IPPs is the highest at 51 pc as compared to a range of 16 to 35pc of GENCOs, he said. Due to the present curtailment of gas to these IPPs the annual additional cost on running on HSD is estimated around Rs 120 billion, he added.