CCoE Okays revising deal with IPPs under 2002 Policy
Islamabad: The Cabinet Committee on Thursday approved recovery of IPPs under Power Policy 2002 and renegotiate a deal in line with the advice of the National Accountability Bureau (NAB).
NAB had established that these IPPs in Pakitan made billions due to excess payment and called for recovery before proceeding on the deal.
It further decided to revise that the Implementation Committee with a representation of Law Division in its composition. The revived Implementation Committee will re-negotiate the Master Agreements with IPPs of 2002. The outcomes of re-negotiations by the implementation committee will be submitted for consideration of CCoE.
The Power Division has recommended the cabinet committee on energy (CCoE) to revise the master agreement with IPPs under power policy 2002 before proceeding with making payment.
NAB has established that all other Independent Power Plants (IPPs) under power policy 2002 had made excess profits.
The anti-corruption watchdog has asked the Power division to recover illegal gains from IPPs before proceeding with payments to them.
Now, the NAB has asked the Power Division to proceed with payments to IPPs under Pakistan’s Power Policy 2002, while keeping unlawful gains in mind, including the Mian Mansha Power Plant.
The Power Division has requested that the Cabinet Committee on Energy (CCoE) to okay revising the master agreements with IPPs that were established under Power Policy 2002.
NAB also hinted at the possibility of “if desired, the Ministry of Energy may proceed under power policy 2002 after recovering the number of illegal gains caused to the state as determined by the above-mentioned NAB investigation in the best interests of the state.
On September 24, 2020, the Cabinet Committee on Energy (CCoE) formed an Implementation Committee to oversee the execution of Memorandums of Understanding (MoUs).
Read More: Cabinet approves payment of the first installment to 35 IPPs
In meetings held on February 8, 2021, the Cabinet Committee on Energy (CCoE) and ECC reviewed the Implementation Committee’s Report and authorized the payment method and agreements with IPPs, which the cabinet ratified on February 9, 2021.
The ECC approved and the Federal Cabinet ratified the following conclusions based on a summary of the Power Division submitted on May 5, 2021.
Accordingly, the Power Division relayed the ECC decision, which the cabinet had also ratified and conveyed to NAB on May 25, 2021.
In light of previous decisions by ECC and the Federal Cabinet, Power Division submitted a summary for ECC’s consideration with the proposal to withhold payments to IPPs (under Power Policy 2002). It further asked to postpone notification of tariff Nepra had determined until completion of NAB investigations.
The NAB has now stated that it has established an illegal gain of Rs. 8.36 billion against M/S Nishat Chunian Power Ltd as a result of tariff determination on the higher side. NAB also hinted at the possibility of “If desired, the Ministry of Energy may proceed under power policy 2002 after ensuring the amount of damage caused to the state as determined by the above-mentioned NAB investigation in the best interests of the state.
It is worth noting that the NAB’s illicit earnings of Rs 8.36 billion established against Nishat Chunian are nearly equal to the sum decided by the bargaining committee.
The power sector audit committee had established similar amounts against other independent power plants (IPPs) in Pakistan under the 2002 Policy.
In this letter, the NAB discusses the 2002 Policy’s agreements with all IPPs.
The Implementation Committee’s finalized agreements with 2002 IPPs do not include a provision for a deduction for illicit profits. It asked for revising existing contracts with IPPs.
To review the Agreements, the energy ministry recommends following the same process as the government followed for earlier IPPs, namely negotiation by the Implementation Committee with the IPPs and approval by the CCoE before presenting the subject to the Cabinet’s ECC. With this in mind, the power division has filed proposals for approval to the CCoE.
