The country’s highest economic decision-making body moved on Thursday to control the damage stemming from reports about $149 million worth of losses following increase in the cost of stalled Nandipur power project, and asked the Ministry of Planning to immediately look into the matter.
Headed by Finance Minister Ishaq Dar, the Economic Coordination Committee (ECC) of the cabinet took notice of a news report alleging irregularities in calculating the revised project cost.
The report cited a letter written by Pakistan Electric Power Company (Pepco)’s former managing director to the chief justice of Pakistan in which he expressed the fear that the upward revision in the project cost by the new government from $329 million to $574 million will cause a loss of $149 million or Rs15 billion.
The ECC agreed that the allegations levelled in the letter would be immediately looked into by the Ministry of Planning and Development and the facts would be brought before the committee and shared with the people.
If the allegations proved true, it will be the first financial scandal of the PML-N government since coming to power in June. Conceived at a cost of Rs22 billion, the cost of the Nandipur power project, with the capacity to produce 425 megawatts of electricity, has been revised upward to Rs57.4 billion, which was approved by the Executive Committee of National Economic Council (Ecnec).
Ecnec, headed by Finance Minister Ishaq Dar, approved the project only after it was cleared by the Central Development Working Party (CDWP), which is chaired by Planning and Development Minister Ahsan Iqbal. In case any wrongdoing is found in the project, the responsibility will fall on both the ministers.
“The revised PC-1 of the Nandipur power project is a well thought out, well-conceived and white collar scam to cheat the public exchequer of $149 million, the benefit of which will go to a select private sector party,” former Pepco MD Munawwar Baseer wrote.
He argued that all the equipment and machinery was already at the project site or the port and paid for. The only increase sought by contractor Dongfang Electric Corporation was $40 million.
And there could be an increase in extended insurance for two to three years, plus interest during construction. This could add up to $25 million at the most, bringing the cost to $425 million plus $25m which equals $450 million, and not $574 million. This means that the hefty amount of $124 million is still unjustified and unaccounted for.
The ECC also reviewed implementation of its decision to procure 100,000 tons of sugar. The Trading Corporation of Pakistan issued a tender on July 3 for procurement of 50,000 tons of white sugar from domestic sugar mills. Bids will be received and opened on July 18. A second tender for 50,000 tons will be issued on the same day.
The ECC will meet again today (Friday) to approve PIA’s business plan to revive the sinking national flag carrier. Its bailout package ranges from Rs25 billion to Rs30 billion as the PIA management wants to purchase narrow-body aircraft and repay expensive loans.
Correction: An earlier version of the story used an incorrect picture. The correction has been made.
Published in The Express Tribune, July 12th, 2013.
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