ISLAMABAD - The issue of encashment of sovereign guarantees is far from resolution, as the government has failed to clear the overdue invoices of the Independent Power Producers (IPPs) and the desperate power producers have once again extended the deadline for encashment by 10 days.

The deadline given by 13 IPPs was due to expire on March 16. However, the IPP advisory council extended the deadline till March 26 to give the government another chance.

As per details, on February 15, 2017, the total verified and audited amounts overdue to the power sector (excluding WAPDA hydel) stood at Rs 414 billion, with the IPPs share of Rs254 billion. According the IPP Advisory Council (IPPAC), on March 10, 2017, the verified, audited and undisputed overdue amount of IPPs was Rs245 billion. As of today, a Government of Pakistan guarantee call of over Rs 35 billion is outstanding.

The IPPs have demanded that the government put forward an acceptable plan for clearing all payables. The IPPs have also demanded that NTDC and CPPA follow the contracts and stop violating other contractual provisions.

The representatives of the IPPs met with the officials of the NTDC and PPIB. While GOP representatives have made a commitment to accept two demands, the dialogue is likely to continue, the advisory council said.

As a show of good faith, the IPPs are postponing their GOP guarantee call of March 16, 2017 to a date 10 days later. Now it is up to the GOP/NTDC to follow. IPPAC members are hopeful that if the GOP/NTDC is sincerely looking to resolve issues and follow the agreement, an acceptable resolution to payment issue can be found.

On March 13, the government had sought two-day time from the Independent Power Producers (IPPs) to resolve the issue of overdue invoices. The government has also asked the IPPs to stop publication of advertisement against the government on the overdue issue as it was damaging the image of the government and causing embarrassment.

At a meeting between representatives of the 13 IPPs and the government here, power producers demanded immediate payment of overdue invoices and a payment schedule. However, the government sought two-day time to sort out the payment mechanism. To resolve the issue of overdue amount, the PPIB invited the IPPs, which had sent notices to invoke Sovereign Guarantee on non-payment of their dues. However, no progress was made.

It is pertinent to mention that earlier this month about 13 independent power producers (IPPs), who have overdue amount of around Rs245 billion, have invoked sovereign guarantees and served a final notice to the government, The IPPs want to recover the remaining amount of the overdue invoices immediately. This is the fourth time that IPPs have initiated process to revoke their sovereign guarantees for recovery of their pending payments. As per rule, there are 10 days after the notice with the government to clear the dues or else the IPPs will have the right to get sovereign guarantees encashed. However, on Thursday, the IPPs advisory council once again gave the government another 10 days. Out of the total undue amount of Rs 414 billion, the government has released Rs30 billion to 50 IPPs and 13 power producers have received Rs13.440 billion against the overdue invoices of Rs48 billion. To review the decision of invoking the sovereign guarantees, the 13 Independent Power Producers (IPPs) have demanded that the government pay at least the overdue invoices immediately. The IPPs that have served final notices include the IPPs that are established under the 1994 and 2002 power policies.