Liquidity crisis in Wapda worsens

ISLAMABAD: In a new development, WAPDA has told that it has no financing even to pay of mobilisation advance to contractors and consultants for Diamer-Bhasha Dam. The liquidity crisis that Wapda is facing has worsened that would also affect project of Mohmand Dam which is under construction. To ensure liquidity, Wapda has asked for payment of its receivables amounting to Rs206.7 billion from Central Power Purchasing Agency-Government (CPPA-G) to meet essential obligations including payment of mobilisation advance to the contractors and consultants for Diamer-Bhasha Dam project. The outstanding dues if not paid on time, the projects of paramount importance such as Diamer-Bhasha and Mohmand dams would be affected. This all has been communicated to top mandarins of Power Division in it is latest letter on February 28, of which a copy is available with The News. Wapda’s top management asserted in its communication that unless the regular stream of financing is not ensured, progress on the said projects will not be expedited. As per the letter, Wapda wants the Power Division to play active role to this effect.

Wapda also showed its inability to pay the loan of Rs49.530 billion it borrowed from commercial banks to pay net hydel profit (NHP) to KP and Punjab. The story does not end here as Wapda also requires to be paid in the head of NHP payables amounting to Rs71.662 billion.

The letter highlights the economic miseries of Wapda saying: “This is in continuation to earlier correspondence of the issue dated February 10, 2020 pertaining to outstanding Wapda hydroelectric receivables from CPPA-G which have now reached to a staggering amount of Rs206.7 billion till now.’’

It mentions that the energy receivables that CPPA-G owes to pay have amounted to Rs85.687 billion. The letter also says that Wapda is also needed to be paid against the loan it borrowed from commercial banks to pay NHP of Rs49.530 billion and more importantly the amount in the head of NHP payables to provinces Rs71.662 billion (KP Rs31.246 billion and Punjab Rs40.416 billion).

The letter also mentions that the Supreme Court of Pakistan has also directed during the proceedings of Diamer-Bhasha and Mohmand dams on Feb 12, 2020, that outstanding payments scheduled from CPPA-G be finalised by the Power Division and funds be released to Wapda so that timely progress in the projects is ensured.

Needless to state that the financing, the letter says, strategy for executing these projects is hinged on timely injection of equity and the subject receivables form a major share of that contribution. Wapda would not be in a position to meet its essential obligations including payment of mobilisation advance to the contractors/consultants for DBD project unless regular stream is ensured.

As per the letter, Wapda requires Rs27.5 billion by end of March, 2020 and additional Rs30 billion by end of June. In the end, Wapda placed the request before Power Division to direct CPPA-G to arrange the requisite financing as per the timelines so that necessary payments are timely arranged.