Circular debt: Recover excess sums paid to IPPs, says PAC

Water and power ministry told to conduct heat-rate audit of power firms

ISLAMABAD:

Just a fortnight after it was revealed that the government had made avoidable payments worth Rs165 billion underscoring a leaning towards Independent Power Producers (IPPs), the parliamentary public accounts committee (PAC) on Thursday directed the water and power ministry to recover excess sums paid out.

Leader of the Opposition in the National Assembly Khursheed Shah chaired the PAC meeting in Islamabad on Thursday where he directed the ministry to conduct a ‘heat-rate audit’ to determine the actual consumption of oil by IPPs versus their production and their efficiency.

Observing that National Electric Power Regulatory Authority (Nepra) should also conduct heat-rate audit, he told the ministry’s secretary to approach the courts for vacating a stay order on the tests.

On January 21, Auditor General of Pakistan Rana Assad Amin had shared findings of a special audit into the Rs480 billion paid to IPPs and fuel suppliers in June 2013, raising 15 objections against the government’s actions.

At the time, finance ministry officials had explained that ‘the amount approved in the budget would have had lapsed’, while Water and Power Secretary Mohammad Younus Dagha warned that the “plants would have to be shut down” if the payment was not immediately made.

As the PAC reviewed the audit report, Pakistan Peoples Party’s (PPP) Shah asked the ministry to explain the debt which the incumbent government had inherited from its predecessor, the PPP which had been at the helm between 2008 and 2013. The committee was informed that the government had inherited a debt of Rs161 billion in 2008.

“The debt increases by Rs15 billion per month” Dagha explained, adding that the government had contained the debt at Rs320 billion in the last two years with zero load shedding for industry and between six to eight hours in urban and rural areas respectively.

However, Shah pointed out that parts of Sindh were witnessing load-shedding of up to 20 hours.

Talking about steps to bolster power production at GENCOs, the secretary said that they had streamlined fuel supply through the railways instead of tankers to counter theft but when the ministry tried to audit Gencos to determine their consumption of oil the IPPs stopped them.

The statement prompted the PAC chairman to exclaim, “It means there was some fraud”.



Talking about the steps by the ministry related to power sector, the secretary said that Gencos were being provided oil through railways to counter theft through oil tankers and that Jamshoro power plant was converted on gas.

PAC member Sheikh Rasheed asked whether there was any precedent in the subcontinent of the government paying out Rs480 billion to power producers as he added that neighboring countries such as India and Bangladesh had managed to overcome these issues.

Published in The Express Tribune, February 5^th,  2016.