Surmounting the insurmountable IPPs

While sensing the startling revelations regarding the age-long power sector agreements by the previous governments, the IPPs and the government are on the collision course. Khalid Mansoor CEO Hubco and Chairman IPP Advisory Council, while dropping a hint of holding negotiation with government on the highly detrimental to national interest ‘capacity trap clause and electricity generation cost, warned the government against making unilateral changes in the power purchase agreements or their complete scrapping. He cautioned that once again London Court of International Arbitration (LCIA) shall be approached, referring to the litigation debacle of last PML-N government in this court in September,2017. This is a glaring bullying tactics to frighten a government of razor thin majority and weaken its determination shown for establishing the fundamentals of transparency and rules of law, sin qua none of true democracy. The agreements had been made under the energy policy of 1994 during the PPP, second tenure of government. An inquiry report is in the offing on the power sector corrupt practices, particularly the agreements made with this electricity producing cartel.

The LCIA had ruled in favour of 9 IPPs for the recovery of Rs.14 billion unpaid capacity charges payments. The electricity purchaser, NDTC had filed an appeal in London High Court in May, 2018 against the decision of arbitration tribunal. But after court proceedings of two days, the NDTC withdrew its case. However, London High Court did not waive off the litigation cost of 400000 pounds. Hence government received two consecutive debacles, either because of certain clauses of open-ended power purchase agreements or deliberately not building a strong case.

It is no longer a secret that major contributory factors of swelling power sector circular debt are the accumulating capacity payment arrears and indexation of IPPs electricity tariff with the US dollar, allowed by the previous government. What is mind boggling is that why the present government is not revealing the Nitti Gritty of power purchase agreements, the power policies approved by PPP and PML N governments? Why legal opinion of experts of Company Law and Law of Tort is obtained as to whether agreements between government and local companies or foreign companies can be made for indefinite period and without the proviso of renegotiation? How long the country and its people will remain hostage to agreements which had been made for the protection of vested interest? Hopefully, government will not succumb to any pressure of the powerful lobbies and will make public the inquiry report of nine member committee, headed by ex SECP Chairman Mohammad Ali.