The principle cause of this crisis, the petitioners said, was the issue of circular debt which had devastated the companies operating in the power sector, and indirectly affected all major sectors of the economy. – File photo

ISLAMABAD: Against the backdrop of crippling loadshedding in the country, eight independent power producers (IPPs) moved the Supreme Court on Tuesday seeking a direction for the government to clear circular debt in the energy sector.

“Clearing a total of Rs61.4 billion outstanding dues will help ensure continued availability of electricity from the IPPs,” the petitions said.

A three-judge bench comprising Chief Justice Iftikhar Muhammad Chaudhry, Justice Jawwad S. Khwaja and Khilji Arif Hussain admitted the petitions for hearing and ordered the court office to fix the matter for July 10.

“Why will we not hear the case when the entire country is clamouring for electricity,” observed the chief justice.

The petitions have been filed by Liberty Tech, Orient Power, Atlas Power Limited, Nishat Power, Nishat Chunian, Saif Power, Halmore Power and Sapphire Electric for the payment of outstanding dues of Rs11.131 billion, Rs4.121 billion, Rs10.478 billion, Rs9.661 billion, Rs10.899 billion, Rs5.722 billion, Rs2.415 billion and Rs6.974 billion, respectively.

These companies which had earlier invoked the sovereign guarantees filed the petitions to initiate legal action domestically, instead of approaching the international arbitrators.

The federal government through the ministries of water and power and finance, National Transmission and Despatch Company (NTDC), Private Power and Infrastructure Board (PPIB), National Electric Power Regulatory Authority (Nepra), Water and Power Development Authority (Wapda), Pakistan Electric Power Company (Pepco), Central Power Purchasing Agency (CPPA), the State Bank of Pakistan (SBP) and Independent Power Producers Advisory Council are respondents.

The petitions questioned whether the failure of the government to honour its sovereign financial guarantees to IPPs was not an act of mis-governance fraught with grave consequences for the wellbeing and prosperity of Pakistan.

The IPPs sought a court declaration that the right to available capacity and energy under the power purchase agreement is conditional upon timely payment and that the NTDC be permanently restrained from levying any liquidated damages at any time. The petitioners requested the court to restrain the respondents from treating them as defaulters of bank loans.

The petitions said the looming energy crisis was bound to have a devastating impact on the economy already reeling from a series of blows due to reckless governmental actions, some planned and some consequential.

“The entire nation has borne witness to the manner in which the functioning of industry as a whole has been crippled by electricity shortages leading to drastic falls in production, reduction in exports, increased inflation, greater unemployment triggering frustration and violent crime in urban centres to the accompaniment of anodyne official statements and lack of any remedial action.”

The principle cause of this crisis, the petitioners said, was the issue of circular debt which had devastated the companies operating in the power sector, and indirectly affected all major sectors of the economy.

Over the past two decades, they said, different governments had failed to meet the energy requirements of the country and on account of factors, including mis-governance and poor policy making, the governments had been unable to provide the necessary support and infrastructure required to alleviate the key problems plaguing this most important facet of government.