LAHORE, Jan 1: Two power generation plants with a combined capacity of 245 megawatts, which could reduce loadshedding in Lahore at least by five to six hours, have been shut down over dispute between their management and the Pakistan Electric Power Company (Pepco).

As the cash-starved Pepco has not been able to meet its financial obligations, both the plants – Japan Power (120MW) and Southern Power (125MW) – have gone off line during the last one month, worsening the power crisis.

Both these plants, situated only a few kilometres from Lahore on Raiwind Road, have been instrumental in containing loadshedding and load stabilisation for the city. With both the facilities going off line, the power supply to many places, especially Lahore, has been hit hard.

Since the two companies have huge claims, besides power charges, against Pepco, the latter agreed on different occasions to provide them ‘fuel advance’ at a rate of 4+Kibor which comes to around 18 per cent for 90 days. In both cases, however, Pepco backed out of its commitment which forced the closure of the plants leading to burden on national grid (making Lahore bear the brunt of the crisis).

The latest victim was 120MW Japan Power which was closed down on Dec 24 on grounds of financial problems. Its chief executive Khan Ahmed Saleem said the problem with the plant was not restricted to fuel advance. “Pepco owes more than Rs3 billion to the plant under different heads. The money is stuck with the company for the last many years despite numerous reminders.”

He said the management had been in negotiations with Pepco for the recovery of the amount, but there was no significant development in sight. The company still has over 5,000 tons of oil, but has decided to shut the plant until recovery of the entire dues.

“Even fuel advance costs the plant over 18 per cent which is no cheaper. But, the current crisis between Pepco and Japan Power is not restricted to fuel advance, but the entire range of dues that have not been cleared for the last many years,” he said.

According to the management of the Southern Power (Sepcol), the plant had been off line since February last, except for three weeks in November when Pepco, in line with its written commitment, provided Rs600 million advance for fuel. The money was directly transferred to the PSO which provided it with fuel.

Within days of advancing money, Pepco backed out of its promise to continue the practice and forced the plant to close down. The plant has since been off line.

Pepco Director-General Tahir Basharat Cheema said the company had paid over Rs23 billion in the last three weeks and was trying to raise further money for more payments. The crisis would, hopefully, be overcome in the next few days, he added.

“It is not only a matter of advancing money, but involves bigger question about the role of Pepco: whether it can be cast in the role of a bank – advancing money to Independent Power Producers (IPPs). Another problem arises when other IPP managements would also like the facility to be extended to them. The company is in the process of hammering out all these issues and raising money for all claimants,” he said.

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