PQEPC warns of Sovereign Guarantee Default

ISLAMABAD: The Port Qasim Electric Power Company (PQEPC) has asked the federal government to clear its dues to avoid constitution of loan agreement default and GoP Sovereign Guarantee Default.
In a letter to caretaker Finance Minister, power company’s CEO, Guo Guangling has stated that under the guidance of the Government of Pakistan, the I 320 MW Port Qasim Coal-fired Power Project , acting as a leading energy project under China, Pakistan Economic Corridor (“CPEC”), has continuously provided the most clean, reliable and economical electricity to the national grid, and endeavored our efforts i, controlling the Circular Debt throughout the outbreak of Covid-I9 pandemic.

The power company has appreciated the efforts of the GoP and the Central Power Purchasing Agency- Guaranteed (CPPA-G) on arranging funds and making electricity tariff payment to IPPs, however, the total payment due amount of the project has reached to Rs 82.3 billion i.e. $ 294.58 million by January 26, 2024, with a delay payment period of over 6 months and could further escalate.
The company has highlighted that, Settlement Agreement for resolving the CPP deduction issue due to non-availability of foreign exchange has been initialed by both parties. Following the official signing of the agreement, the amount will be increased by Rs. 13.6 billion.
In this case, the project shareholders /sponsors from China and Qatar has disclosed significant discontent and request to immediately take all necessary measures to reduce the outstanding amount.

The company has notified that current due amount entitles PQEPC to proceed to suspend the plant operation according to PPA Section 9.10 without any Liquidated Damages (LDs).
PQEPC has comparative advantages on the EPP tariff as compared with other oil and RLNG power plants. In this regard, project suspension will be a lose-lose situation that both sides jointly make efforts to avoid. Therefore timely settlement of due amount of the project is imminently required to ensure the sustainable power generation and avoid constitution of loan agreement default and GoP Sovereign Guarantee Default .

In light of current scenario, the power company has brought critical situation of payment delay with the high ups and requested for coordination with the relevant authorities to provided financial support to CPPA-G enabling them to pay the QPEPC of the outstanding amount as early as possible.

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