Colossal waste of taxpayers’ money

PTI Senator Nauman Wazir claimed at the of Senate Committee on power was on Wednesday that Independent Power Producers (IPPs) are being paid Rs.422 billion annually on account of idle capacity charges, without generating electricity. They are enjoying this windfall gains for the last 23 years because of their strong connections with the top leadership of PPP and PML-N. Neither the drafts of the agreements that were made with the IPPs during the second government of Benazir Bhutto were put before the parliament nor the ones of coal based thermal power plants made by the last PML-N government had come up for parliamentary debate and ratification by the parliament as an established norm of democracy.

Initially, the IPP agreements had a proviso of “build, operate and transfer.”The clause may have been discretely deleted because the shape of the agreement then changed to be “build, operate and own.”Amazingly, National Electric Power Regulatory Authority (NEPRA) has allowed different sets of production cost for the private thermal power plants, while using the same fuel and identical technology. The production cost differential per megawatt ranges from half a million US dollars to one million and one and half million. The owners of the IPPs are so influential and powerful that they could not be persuaded to agree to a transparent audit of electricity production cost.

It was because of this institutionalized misappropriation of taxpayers’ money that former Chief Justice Supreme Court Mian Saqib Nisar took suo motu notice of the excessive payments to the IPPs early last month and sought a report on the matter. Notices were also issued to the managements of the IPPs. He was of the view that in other countries bilateral agreements are changed in the national interest.

It the claim PTI member of Senate is correct then excessive payments to IPPS plus the default of electricity bills worth Rs.870 billion by the political and business elite and government departments is approximately equal to the accumulated circular debt of Rs.1.2 trillion for the payment of which the consumers who regularly and honestly pay their electricity bills are unjustly penalized through upward revision of power tariffs.

The clauses of the power purchase agreements made with the IPPs are heavily loaded against the national interest. The National Distribution and Transmission Company (NDTC) lost a case regarding payment of Rs. 11 billion to nine IPPs in the London Court of International Arbitration (LCIA). The NDTC then invoked the jurisdiction of London High Court against the decision of LCIA but met with a legal debacle in the form of court order to pay litigation cost of Rs.66.7 million after the hasty withdrawal of the case. Like the power purchase agreements made during the second tenure of PPP government, the previous PML-N government has also made shady agreements with Chinese power companies. Will the present government be able to engage a capable legal time to steer the cash strapped Pakistan from the quagmire of idle capacity payments to private power producers which has been created by the previous rulers?

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