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Chinese IPPs warn to closure if nor paid Rs300bn

With more than Rs300 billion in stuck up dues, more than two dozen Chinese firms operating in Pakistan on Monday said that they would be forced to shut down their power plants this month unless payments were made upfront.
This was the overwhelming theme of a meeting presided over by Minister for Planning and Development Ahsan Iqbal with more than 30 Chinese companies operating under the flagship multi-billion-dollar China-Pakistan Economic Corridor (CPEC) in various areas including energy, communication, railways and others.
There was a plethora of complaints, including those relating to complex visa procedures for Chinese executives, taxation and so on, but there were also counter complaints from the Pakistani side as well, on delayed responses to their communications, informed sources told Dawn.
About 25 representatives from Chinese independent power producers (IPPs) spoke one after the other and complained about the buildup of their dues and warned that without upfront payments they would shut down within days. They said the authorities were pressuring them to maximize generation to meet peak summer needs, but “this is impossible for us in view of serious liquidity issues”.
 
The real cause of ever rising Circular Debt and ever increasing energy prices in Pakistan... Thx to Democratic revenge started with first IPP by PPP and then re-enforced and multiplied by successive democratic revenges post Mushy...!!! Khan tried re-negotiating the so much unjustified (read commission driven) contracts... Got many local IPPs to reduce the guaranteed (and self filed) 17% Profit margin to 12% in coming years and also to reconsider capacity based agreements whereby these IPPs are paid as per capacity without even utilizing a single unit... Imagine 30MW Capacity now with just 17-18MW demand... Of course you have to pay higher prices.... and circular debt will never reduce... What goes of Thug Lords whose wealth keeps increasing abroad..
And just top it all up with the Exposed MoU and Contract signing ceremonies in last PMLN era where Saif ur Rehman came as representative of some so called Chinese Consortiums???
 
The real cause of ever rising Circular Debt and ever increasing energy prices in Pakistan... Thx to Democratic revenge started with first IPP by PPP and then re-enforced and multiplied by successive democratic revenges post Mushy...!!! Khan tried re-negotiating the so much unjustified (read commission driven) contracts... Got many local IPPs to reduce the guaranteed (and self filed) 17% Profit margin to 12% in coming years and also to reconsider capacity based agreements whereby these IPPs are paid as per capacity without even utilizing a single unit... Imagine 30MW Capacity now with just 17-18MW demand... Of course you have to pay higher prices.... and circular debt will never reduce... What goes of Thug Lords whose wealth keeps increasing abroad..
And just top it all up with the Exposed MoU and Contract signing ceremonies in last PMLN era where Saif ur Rehman came as representative of some so called Chinese Consortiums???
IPP model is accepted by the whole world. Its a very sustainable model, your take aways are only emotional. To set a power project of a decent size or utility scale you have to invest millions of dollars. Since, debt is more cheaper then the equity the projects are more debt driven just to make the tariff more competitive.
Renegotiation was not a commercial one rather it is forceful renegotiation by the government through some agencies on board. Which has devastated the sentiment, just image the locked agreements are no more locked.
These IPPs have never called the soverign guarantees of the GOP just to protect the integrity of the government.
 
IPP model is accepted by the whole world. Its a very sustainable model, your take aways are only emotional. To set a power project of a decent size or utility scale you have to invest millions of dollars. Since, debt is more cheaper then the equity the projects are more debt driven just to make the tariff more competitive.
Renegotiation was not a commercial one rather it is forceful renegotiation by the government through some agencies on board. Which has devastated the sentiment, just image the locked agreements are no more locked.
These IPPs have never called the soverign guarantees of the GOP just to protect the integrity of the government.
kick backs , huge returns hourly basis, are the only cause of these IPPs to be engaged , what's makes us not yo plan and invest abd generate our own power plants, Indonesia faced the same
 

Goher Ali

Member
kick backs , huge returns hourly basis, are the only cause of these IPPs to be engaged , what's makes us not yo plan and invest abd generate our own power plants, Indonesia faced the same
what you are talking about? Have you ever read an EPA or a PPA?
Its not the government's job to produce electricity. Why they put a charge on national assets?
 

Goher Ali

Member
I disagree with your disagreement. Your arguments lack basis.
if an IPP is not paid for the capacity payments the projects are not bankable and no lender would finamce the government.
Second thing the credit rating of many big corporates is more lucrative than the soverign one which helps in reducing down the spread on the debt and all the colleterals are limited to the project's assets.
 
if an IPP is not paid for the capacity payments the projects are not bankable and no lender would finamce the government.
Second thing the credit rating of many big corporates is more lucrative than the soverign one which helps in reducing down the spread on the debt and all the colleterals are limited to the project's assets.
if an IPP is not paid for the capacity payments the projects are not bankable and no lender would finamce the government.
Second thing the credit rating of many big corporates is more lucrative than the soverign one which helps in reducing down the spread on the debt and all the colleterals are limited to the project's assets.
 
if an IPP is not paid for the capacity payments the projects are not bankable and no lender would finamce the government.
Second thing the credit rating of many big corporates is more lucrative than the soverign one which helps in reducing down the spread on the debt and all the colleterals are limited to the project's assets.
Good that you have tried giving some reasons... But mind it that the ones I mentioned are also not emotional ones... The things you said are also based on ideal world... But when same IPP charges almost double the amount per unit in Pakistan compared to Bangladesh... something is wrong... Likewise, as even accepted by a former VP of Hubco... the amount of profit IPPs are allowed (17%) is not the only thing they get away with... The input and product costs that they submit for this 17% margin also has many loop holes... For example, as he said, if they declare that they purchased Coal for USD 5 instead of market price of USD 2.5, govt. accepts as per contracts... So there is so much more than what just looks at the surface... Remember cases of Karkey???
I do remember as we were studying back in mid 1990s, when first contract was given to HubCo... They used to say that the real impact of these IPPs country will have to face 20-30 years down the road... and now we are actually facing the consequences... WIth never ending Energy price hikes, inefficient and costly production from expensive inputs, incompetitive business as energy costs have gone so much high...
Even the best of conditions and agreements and projects are bound to fail if done with malice as intent and commission as objective.
 
Good that you have tried giving some reasons... But mind it that the ones I mentioned are also not emotional ones... The things you said are also based on ideal world... But when same IPP charges almost double the amount per unit in Pakistan compared to Bangladesh... something is wrong... Likewise, as even accepted by a former VP of Hubco... the amount of profit IPPs are allowed (17%) is not the only thing they get away with... The input and product costs that they submit for this 17% margin also has many loop holes... For example, as he said, if they declare that they purchased Coal for USD 5 instead of market price of USD 2.5, govt. accepts as per contracts... So there is so much more than what just looks at the surface... Remember cases of Karkey???
I do remember as we were studying back in mid 1990s, when first contract was given to HubCo... They used to say that the real impact of these IPPs country will have to face 20-30 years down the road... and now we are actually facing the consequences... WIth never ending Energy price hikes, inefficient and costly production from expensive inputs, incompetitive business as energy costs have gone so much high...
Even the best of conditions and agreements and projects are bound to fail if done with malice as intent and commission as objective.
Zeeshan Zahoor timely IPPs ko pay kr dea gya hota to shyd nobat yahan tk na ati. Apni hakoomat bchanay k lea oil companies ko bilwja ki subsidies denay k bjy agr national projects mn invest kr dea h
gya hota to shyd ye maslay na hotay. Plus consider the electricity situation back in 2013 and onwards. Its not the case k hmyn electricity nhn chahye. Hmari manufacturing tabah hui pri ha electricity ki waja sy. Itni bijli bnae he is lea gae the k istemaal ki ja skay. Us wqy ye b agenda tha k neighbouring countries ko bijli baichi b jy gi.
 

Salman-9626

New Member
Zeeshan Zahoor timely IPPs ko pay kr dea gya hota to shyd nobat yahan tk na ati. Apni hakoomat bchanay k lea oil companies ko bilwja ki subsidies denay k bjy agr national projects mn invest kr dea h
gya hota to shyd ye maslay na hotay. Plus consider the electricity situation back in 2013 and onwards. Its not the case k hmyn electricity nhn chahye. Hmari manufacturing tabah hui pri ha electricity ki waja sy. Itni bijli bnae he is lea gae the k istemaal ki ja skay. Us wqy ye b agenda tha k neighbouring countries ko bijli baichi b jy gi.
Agenda was making commissions from IPPs right from start of Hubco to KarKey and onwards till now... Even Nawaz Sharif made Rs. 500 billion immediate payment when he got PM third time in 2013... But such were the contracts that the Circular Debt kept on increasing.... and now it stands above Rs. 2500 last time I checked.
 
Agenda was making commissions from IPPs right from start of Hubco to KarKey and onwards till now... Even Nawaz Sharif made Rs. 500 billion immediate payment when he got PM third time in 2013... But such were the contracts that the Circular Debt kept on increasing.... and now it stands above Rs. 2500 last time I checked.
It's not just the nature of contracts. Though contracts were awarded at high tariff initially to attract investment especially considering not a single MW was added to the system in 80s and some small plants seem to have been given LOI as patronage. There are other underlying reasons such as massive electricity theft, inefficient system due to no major capex during 90s, also we have historically paid low price for electricity, gas etc as compared to cost being incurred by the system for gas from Sui we might even have paid some of the lowest in the World thus all the noise on Iranian gas just see WB and other such reports on the issue.
 
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