A parliamentary panel on water and power, while voicing concern over high rates of return on the energy projects being undertaken by Chinese firms, has called for making public all terms and conditions of the schemes signed between Pakistan and China.
In a meeting of the Senate Standing Committee on Water and Power chaired by Senator Zahid Khan here on Tuesday, member of the committee Mohsin Leghari expressed surprise that the government would pay a 20% to 50% return on 200 to 1,000-megawatt power projects, which would be developed with the assistance of China.
“Chinese power companies will get back all their investment in energy projects in four years,” he remarked and underlined the need for disclosing the proposed terms and conditions of Pakistan-China energy projects.
He also suggested that officials of the National Electric Power Regulatory Authority (Nepra), who had decided the tariffs, should be summoned and asked to explain their positions.
“Initially, the rate of return for Chinese investors was set at 17%, but it has now been increased to 27%,” Leghari claimed.
Following a barrage of criticism, State Minister of Water and Power Abid Sher Ali pointed out that a final decision on returns would be made during the visit of Chinese President Xi Jinping to Pakistan.
“There would be no violation of the country’s constitution and prescribed terms of references,” he said while giving assurances to the committee members.
The Chinese president was due to arrive earlier this month, but his trip was put off because of the current political impasse in Pakistan. The two countries are working on a fresh date for the visit during which agreements for major projects are expected to be signed.
In the Senate panel’s meeting, Senator Shahi Syed and Nisar Muhammad called K-Electric, formerly Karachi Electric Supply Company, a white elephant, saying the company had been drawing 800 to 900MW from the National Transmission and Dispatch Company (NTDC) in violation of an agreement.
They suggested that recommendations of a sub-committee should be submitted to parliament and the apex court in order to address the issue.
Abid Sher Ali proposed that a separate meeting should be held to take up the K-Electric issue. Independent power producers (IPPs) were transferring capital abroad, but they had not increased power production, he added.
The panel was told that the federal cabinet, in its next meeting, would accord approval to fresh recruitments on slots lying vacant in the water and power sector for a long time.
Ali said Prime Minister Nawaz Sharif was ready to fill 50% vacant posts in the Water and Power Development Authority (Wapda) and allied departments. “The cabinet will give the go-ahead to hiring on vacant slots.”
Following the assurance, members of the committee unanimously recommended to the government to start recruitments in all state-owned power distribution companies to control unemployment in the country.
Published in The Express Tribune, September 17th, 2014.
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Return of 27% guaranteed to Chinese is a "daylight robbery". Secondly, totally absurd answer from Abid Sherali. Chinese President is not a financial analyst. All terms must be final prior his visit.
its higher because it includes kick backs, very reason they dont build dams and keep on building private thermal power plants over the years and IPP are getting richer and poor Pakistanis paying through nose without getting constant power!
go for hyderal power and build dams big and small, its cheaper and environment friendly with no import cost on oil, gas or coal! dont make money from this poor nation, take a break from corruption!
LoL! “Higher than Himalaya’s”, ” Deeper than Indian Ocean” and “Sweeter than Honey” friend, the Peoples Republic of China, shows that they are “More Avarious than Shylock”.
Pakistani’s should remember that what the Pakistan Government peddles as “Aid” and “Investment” is nothing more than a very high return export financing market for the Peoples Republic project engineering exports. The Peoples Republic is economic shark enough to smell the blood in the water and figure out that a country like Pakistan which is dependent on IMF handouts for economic viability is in no position to impose terms and is ripe for price gouging. Pakistani’s will also find that terms offered by the Peoples Republic for similar projects in India will invariable be more favourable than they offer in Pakistan.
This is criminal!
27% return is on equity whereas IRR is still 17% and without reimbursement of withholding tax to sponsors which is broadly in line with 2002 power policy wherein the return was 15% plus reimbursement of withholding tax and 1994 power policy wherein IRR was 18%. These projects will take four years construction, thus making claim that entire reimbursement will be recovered in four years is out of logic. The real issue which one need to consider is that whether project cost has been computed correctly.
Abid Sher Ali should explain now, why rate of return was increased from 17 to 27 percent. And why wait till chinese President's visit to decide rate of return it should be decidef before hand. Why government is trying to kill people of these poor country