Pakistan defers probe into private power sector's alleged wrongdoing

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ISLAMABAD (Reuters) - Pakistan on Tuesday deferred for two months an inquiry into suspected contract violations by independent power producers which may have cost the national exchequer billions of dollars.

Hobbled by decades of energy shortages, successive Pakistani governments have pursued private sector investment in power production, offering lucrative returns backed by sovereign guarantees.

Prime Minister Imran Khan’s government ordered late last month the investigation into the IPPs’ contracts after he was presented with a 278-page report by a government committee which outlined a number of alleged transgressions.

However, a cabinet meeting Khan chaired on Tuesday decided to defer the probe. “In order to provide a chance of meaningful negotiations with the IPPs, constitution of inquiry commission ....may be deferred for two months,” said the meeting minutes seen by Reuters.

Information Minister Shibli Faraz said the decision was taken due to the government’s focus on measures to fight COVID-19. “We will not leave it unattended,” he told a news conference in Islamabad.

Around 40 independent power producers operate in Pakistan. Company representatives have consistently rejected allegations of wrongdoing.

Khan had also ordered the report, which alleges the IPPs made billions of dollars in questionable deals, to be made public. That too will be held up for another two months.

Some of Khan’s powerful cabinet ministers have stakes in the private power sector business.

Previous governments said the incentives, including dollar indexation and guaranteed capacity payments, were necessary to attract investors unwilling to put money into an uncertain Pakistani economy.

Up until 2017, prolonged power outages hit the country’s industrial production.

Pakistan’s energy ministry has lately been holding sessions with the IPPs after some of the report’s contents were leaked to the media, to seek “their contribution in rationalization of tariffs”.

Pakistan is now energy sufficient, but relies heavily on the private power sector.

Writing by Asif Shahzad; Editing by Emelia Sithole-Matarise

https://in.reuters.com/article/paki...ower-sectors-alleged-wrongdoing-idINKBN22H2FW

 

[valkyr_96]

The vote on the top has got nothing to do with the text at the bottom.

 

[ziaulislam]

out of court settlement will always be the best solution..but with return of over 40% and other issues something has to be done..you simply cant afford to keep doing what you are doing..govt should either buy them ou or defualt or renegotiate..

 

[Path-Finder]

there is a need for laws about signing contracts that go against national interests. enough of these ipp, orange metro, LNG deals that will enslave the whole nation.

 

[Ahmad Saleem]

Govt is negotiating with IPPS to provide the electricity at lower rates and adjust inflated rates through cheap future agreements. It is trying to work out a deal this way instead of sending case to NAB and i think this is the rational way as indicated by some other economists too.
Actually Pakistan is not in position to get back anything from these IPPS because what they were getting was according to the agreements. Now if the agreements were flawed in the first place then you cant hold companies responsible unless you find concrete evidence that companies influenced the deal through bribes. This was the case with reko diq and Pakistan lost the case in international court.

https://twitter.com/x/status/1254645621644046336

 

[fisher1]

The point of this exercise was to show the corruption of previous parties. That's achieved, case closed.

If Imran Khan were to actually do justice then his own ministers would be sent home.

Imran Khan thinks he's cunning and can fool people but he's an open book by now and his tricks are obvious. You can only fool someone once

 

[Syed1.]

The point of this exercise was to show the corruption of previous parties. That's achieved, case closed.

If Imran Khan were to actually do justice then his own ministers would be sent home.

Imran Khan thinks he's cunning and can fool people but he's an open book by now and his tricks are obvious. You can only fool someone once

Well you cracked it Sherlock Holmes now go vote for Nawaz Sharif in 2023 and watch in pain as IK wins an even bigger majority

 

[koolio]

Well you cracked it Sherlock Holmes now go vote for Nawaz Sharif in 2023 and watch in pain as IK wins an even bigger majority

Still some numpties are willing to give Godfather and Billo Rani more chances to screw the hell out of this country, Well I doubt Godfather will come back but his siblings will carry on and try more disinformation campaign with further loot and plunder.

 

[HAIDER]

IPP is curse, should be investigated. All contracts signed in Dollar amount and under foreign law.... mother bureaucracy and kick backs to politicians..

 

[notorious_eagle]

The amount of hera pheri that has happened in the Power Sector in the past 5 years is simply astonishing. It makes me want to rip my hair out and cry.

PML-N Government didn't even read the contracts they were signing with the Chinese. It literally leaves Pakistan on the hook for decades in such shoddy deals. PTI has been trying to re-negotiate the contracts but lets see what happens.

 

[Dr. Strangelove]

Last year we paid over 300 billion in Capacity payments alone as more and more Projects in pipeline come online this will only increase. Therefore its absolutely necessary to renegotiate the terms of these agreements and make a new IPP policy so the mistakes of the past are not repeated.

If this is not done Power Sector in Pakistan will become unsustainable as the majority wont be able to afford Electricity at such high rates.

 

[Baghial]

میر کیا سادہ ہیں،بیمار ہوےَ جس کے سبب اُسی عطاّر کے لونڈے سے دوا لیتے ہیں۔۔۔

• 
  
  
• May 06, 2020, 07:54 IST

• Pakistan on Tuesday deferred for two months an inquiry into suspected contract violations by independent power producers which may have cost the national exchequer billions of dollars.
  
  Hobbled by decades of energy shortages, successive Pakistani governments have pursued private sector investment in power production, offering lucrative returns backed by sovereign guarantees.
  
  Prime Minister Imran Khan's government ordered late last month the investigation into the IPPs' contracts after he was presented with a 278-page report by a government committee which outlined a number of alleged transgressions.
  
  However, a cabinet meeting Khan chaired on Tuesday decided to defer the probe. "In order to provide a chance of meaningful negotiations with the IPPs, constitution of inquiry commission ....may be deferred for two months," said the meeting minutes seen by Reuters.
  
  Brand Solutions
  
  Information Minister Shibli Faraz said the decision was taken due to the government's focus on measures to fight COVID-19. "We will not leave it unattended," he told a news conference in Islamabad.
  
  Around 40 independent power producers operate in Pakistan. Company representatives have consistently rejected allegations of wrongdoing.
  
  Khan had also ordered the report, which alleges the IPPs made billions of dollars in questionable deals, to be made public. That too will be held up for another two months.
  
  Some of Khan's powerful cabinet ministers have stakes in the private power sector business.
  
  Previous governments said the incentives, including dollar indexation and guaranteed capacity payments, were necessary to attract investors unwilling to put money into an uncertain Pakistani economy.
  
  Up until 2017, prolonged power outages hit the country's industrial production.
  
  Pakistan's energy ministry has lately been holding sessions with the IPPs after some of the report's contents were leaked to the media, to seek "their contribution in rationalization of tariffs".
  
  Pakistan is now energy sufficient, but relies heavily on the private power sector.

WHY PEOPLE OF PAKISTAN STAY POOR, AND BUISNESSMAN BECOME
BILLIONAIRE IN A COUPLE OF YEARS?

ISLAMABAD: While the dust of sugar and floor scandals is yet to settle, an annual swindling of over Rs100 billion by the power sector is appearing on the horizon as a major scam.

The nine-member committee headed by ex-SECP chairman Muhammad Ali has traced the Independent Power Plants (IPPs) scam minting over Rs100 billion annually. The first ever inquiry report of 278 pages has revealed that the wrong doings are not only limited to the true up costs of IPPs and the powerhouses installed under government to government arrangements, but also in their tariffs, fuel efficiencies, economic merit order, guaranteed rate of return in USD and certain conditions in purchasing the electricity from powerhouses have inflicted an irreparable loss to the national kitty.

According to the official sources the committee chairman has already briefed the prime minister over its findings. The PM is very upset over the monumental increase in IPPs profits resulting in massive surge in circular debt and electricity tariff. ‘The IPPs that were installed in the country as per the Power Policy 1994 have unjustifiably pocketed huge profits of Rs350 billion.’ Under the government policy, Nepra allowed 15 percent rate of return with dollar indexation, but power plants are making 50-70 percent annual profits prompting the nine-member committee to recommend to the government to immediately do away with the capacity payment formula based on ‘take or pay and recover the amount of Rs100 billion from IPPs.’ Imran had on August 7, 2019 constituted the committee headed by former SECP chairman Muhammad Ali. Besides representatives from ISI, FIA and SECP, eight more institutions were part of the committee. The committee submitted its detailed findings and recommendations to the Prime Minister in its report: ‘Power Sector Audit, Circular Debt Resolution and Future Roadmap. The nine-member committee conducted due diligence of the documents pertaining to the costs and tariffs of more than 60 power plants. Interestingly, all the members of the committee were unanimous with the findings and there was no dissenting note in the report.

It bares the bitter fact that the power houses inflated their true up costs with additional increase of Rs 2-15 billion to manage the higher tariff from National Electric Power Regulatory Authority. More importantly the cost of coal-based power plants was artificially increased by Rs30 billion. However apart from Nepra, none of the relevant institutions verified the cost of power plants independently through any third party.

The report further says that the power purchase agreements with entrepreneurs of power houses were inked on ‘take or pay’ basis under which the government has paid billions of rupees in the head of capacity payments even when the power houses were non-operational or when the electricity demand was reduced. In the ongoing financial year, the government has to pay Rs900 billion to power houses as capacity payments and will pay Rs1,500 billion in 2025. Such agreements not only caused huge losses to the national exchequer but also piled up unprecedented financial burden on masses. Now the government with ailing economy is unable to pay capacity payments more. And to pay the capacity payment, the government will be left with no option but to increase the power tariff to unimaginable levels. The report also says that power houses factually use less fuel and earn unjustifiable profits. Furthermore, they submit faulty statements with Nepra to this effect. The report also blamed Nepra for not conducting the fuel efficiency audit of the power houses due to which the circular debt has increased to over Rs1800 billion. The power generation companies are pocketing profit of 50-70 percent instead of 15 percent which is unprecedented across the whole region.

It suggested to the government that the guaranteed rate of return for power houses should not be more than of 4 to 5 years, whereas it was extended to IPPs up to 25 years. It is a general impression in the market that power houses manage to retrieve their total cost within one to two years’ time mainly because of showing exaggerated costs, high tariffs and high volume of guaranteed rate of returns. According to the report, most of the power houses (IPPs) were installed in Pakistan through offshore companies.

It asked the government to carry out the forensic audit of the costs of power houses setup under power policy 2002 and also asked for verifying the cost of technology used in the power plants in other countries. The prime minister had directed the committee to prepare the report in three months. However, because of difficulties in acquiring the documents of the power houses, and the highly technical nature of the inquiry, the committee took eight months to complete the report.

 

[Dil Pakistan]

A comprehensive constitutional package is about to be tabled in NA.
The package will cover 18th amendment, NAB and many other issues.
To get the amendment, govt.needs lot of votes including those who are involved in wheat, sugar and power scandals.

All these issues will be taken up after the amendment.

 

[Baghial]

Recently there seems to be a campaign for the return of the Political Mafia now that they have been bailed out and even allowed to leave the country. The situation in Pakistan is unique in many ways. Historically most ‘Mafias’ had their private networks through which crime was perpetrated. They did bribe state functionaries to get their way but their authority remained covert. Only in the Islamic Republic of Pakistan they were allowed to control the levers of state with disastrous consequences that the nation faces today

A comprehensive constitutional package is about to be tabled in NA.
The package will cover 18th amendment, NAB and many other issues.
To get the amendment, govt.needs lot of votes including those who are involved in wheat, sugar and power scandals.

All these issues will be taken up after the amendment.

The dictator now openly admits that NRO was his biggest political blunder. the nation is in struggle for economic survival. Post NRO period has been disastrous for the country and its economy. . Recovery of the loot and plunder remains a serious challenge.
Stripes of the leopard can never be erased they have to be pushed into the jungle where they belong allowing the nation breathe and live and grow in peace and prosperity.

Pakistan has to be protected from this Sicilian style Mafia, their resurrection will result only in gloom and doom

last week A “friendly country” has told Pakistan to dump IPPs scam report immediately. Asad Umar & Omar Ayub briefed PM Imran Khan about serious concerns of “friendly country”. PM decided to dump it. So now GoP wont make it public. GoP decided to fall in line after one msg.

 

[Dil Pakistan]

Recently there seems to be a campaign for the return of the Political Mafia now that they have been bailed out and even allowed to leave the country. The situation in Pakistan is unique in many ways. Historically most ‘Mafias’ had their private networks through which crime was perpetrated. They did bribe state functionaries to get their way but their authority remained covert. Only in the Islamic Republic of Pakistan they were allowed to control the levers of state with disastrous consequences that the nation faces today





The dictator now openly admits that NRO was his biggest political blunder. the nation is in struggle for economic survival. Post NRO period has been disastrous for the country and its economy. . Recovery of the loot and plunder remains a serious challenge.
Stripes of the leopard can never be erased they have to be pushed into the jungle where they belong allowing the nation breathe and live and grow in peace and prosperity.

Pakistan has to be protected from this Sicilian style Mafia, their resurrection will result only in gloom and doom

last week A “friendly country” has told Pakistan to dump IPPs scam report immediately. Asad Umar & Omar Ayub briefed PM Imran Khan about serious concerns of “friendly country”. PM decided to dump it. So now GoP wont make it public. GoP decided to fall in line after one msg.

If true, then WOW!