Court demands electricity tariff comparison of IPPs, RPPs

Ex-minister Raja Pervez Ashraf appears before SC to answer corruption charges in rental power deals.

ISLAMABAD: The Supreme Court has asked the government to provide a detailed comparison of electricity tariffs and generation capacity of plants operated by Independent Power Producers and Rental Power Projects (RPPs) by Tuesday.

A two-member bench comprising Chief Justice (CJP) Iftikhar Muhammad Chaudhry and Justice Khilji Arif Hussain was hearing a suo motu case coupled with two identical petitions filed by Housing Minister Faisal Saleh Hayat and PML- N MNA Khawaja Asif involving allegations of corruption in the award of contracts for RPPs.

During the hearing, the CJP noted that the case record indicated government negligence in awarding contracts. The bench remarked that the mobilisation advance given to Karkay Rental Power Company was doubled without the cabinet’s approval. Akram Sheikh, counsel for Karkay, contended that his client’s project was delayed for nine months due to non-issuance of a standby letter of credit. The CJP observed Karkay was given 14 per cent mobilisation advance in May 2009 amounting to Rs6 billion, whereas the federal cabinet approved the project in August 2009. Sheikh said the government did not execute the agreement with Karkay, despite the fact that it had fulfilled all the terms and conditions.

“Why was the government so kind to your company that it paid a huge amount without the Economic Coordination Committee’s approval?” the CJP asked. When the bench remarked that Karkay should refund the mobilisation advance, Sheikh said the government was responsible for violating the agreement. He said it was due to the Rs400 billion circular debt that the country was facing 15 to 16 hours of daily load-shedding. Justice Khilji Arif Hussain observed that the electricity generated by Karkay would cost Rs44 per unit.

Meanwhile, former minister for water and power Raja Pervez Ashraf appeared before the court. “Prima-facie, the blame for RPPs falls on your shoulders and you have been called to exercise your legal right of defence,” the CJP said. Ashraf said the allegations levelled against him were false and he could clarify his position. The CJP said if 14 per cent mobilisation advance were to be paid to companies before reaching an agreement, more parties would participate in the bidding process. Counsel for ministry of water and power Khawaja Tariq Rahim informed the court that the government concludes agreements keeping in view the requirements for the coming 15 years.

 

Published in The Express Tribune, November 1^st, 2011.