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07 - 13 Apr , 2012
VIEWPOINTCourt Verdict In RPP Case
Exposes Colossal Corruption By Govt Leaders


The closure of all the nineteen Rental Power Projects (RPPs) – seventeen sanctioned by the present government since 2008 and two by its predecessor – ordered by the Supreme Court for massive corruption will not have any major impact on the present capacity of power generation. From day one, strong suspicions and accusations were publicly aired over the sleazy affair with all roads leading to the then Water & Power Minister, Raja Parvez Ashraf, cynically named as Raja Rental. However, whatever was alleged has now been proved hundred percent that colossal corruption dominated the award of RPPs to private parties.
Faisal Saleh HayatAnother ironic aspect is that it was no less than a leading member of a coalition party and a federal minister, Makhdoom Faisal Saleh Hayat, who launched a crusade against money minting in the RPPs and took it to a logical conclusion. He not only kept accusing the government before his PML-Q joined the governing coalition on May 2, 2011, but stood ground even after becoming part of it. When he filed the petition in the apex court in September 2009, Hayat was not a cabinet member nor was his party a partner of the PPP. His senior party colleagues put intense pressure on him to abandon pursuing the court case, but he remained inflexible and kept following his petition with the same old vigour and enthusiasm. He deserves full marks on this account - he brought about grave allegations and established their veracity in the court of law.
Politicians need to follow the precedent that this MP from Jhang has set in Pakistan's history. Even the Supreme Court praised him in black and white when it said the role the two petitioners, Hayat and Khawaja Muhammad Asif of the Pakistan Muslim League-Nawaz (PML-N), is laudable. "They being the holders of public offices, highlighted the
instant scam of corruption and corrupt practices and fulfilled their commitment to the Constitution as well as the general public whose rights enshrined in Articles 9 and 24 of the Constitution were being violated."
A fact that Hayat kept highlighting and which the court also accepted was that Pakistan has an installed capacity of 21,000 megawatts, but its present potential was not being fully exploited.
Had the production been achieved up to the optimum level, as it should have been, there is and was no need to have RPPs. The RPPs, it is now abundantly clear from the court ruling, were just meant to fill pockets of the cabinet members and top bureaucrats. Their cancellation is a big slap on the face of the heavily tainted government, which has the dubious distinction of disregarding judicial judgments. As per its established tradition, the government dismissed the decision as inconsequential and harped on the theme that there was no corruption whatsoever in the RPPs deals. But the court verdict spanning 27,000 words vehemently rebutted this claim.
Apart from the annulment of the RPPs, another end result of the judicial decision is the order that former Water & Power Ministers, Raja Parvez Ashraf and Liaquat Jatoi, former Water & Power secretaries, three finance secretaries, and all the top officials of several government run organisations, who were part of the decision making process for ordering heavy down payments to the RPPs, should be proceeded against by the National Accountability Bureau (NAB). This throws up a large net around the neck of a number of top guns, who have been colluding and joining hands with the present rulers to make money.
But there is little or no hope of any concrete action because the NAB is to take action against all of them. The reason is quite clear: the NAB led by Admiral (retd) Fasih Bokhari is a handmaid of the government Raja Parvez Ashrafand it will dance to the tunes set by it. It remained worthless and useless even after Bokhari was made its chairman as he is consistently obeying official orders despite earning several censures from the apex court. In the normal course, what was instantly expected was that a predominant majority of the former ministers and top bureaucrats, who were held corrupt by the court, should have been put behind the bars within a few hours of the ruling, but no such thing happened in this case. In the days to come, the NAB would attract more brunt from the Supreme Court as it has been ordered to submit fortnightly progress report on the proceedings against those found corrupt by the highest
judicial body.
The judgment said that prior to the introduction of RPPs, the system of generation of electricity under the control and management of Ministry of Water & Power, WAPDA, Pakistan Electric Power Company (PEPCO), Generation Companies (GENCOs) etc., had sufficient potential to produce more electricity, but instead of taking curative steps for its improvement, including clearance of circular debt of the Independent Power Projects (IPPs) or resorting to other means of generation of electricity, billions of rupees were spent on RPPs, which proved complete failure because the object could not be achieved as the power shortage persistently continued, and yet more RPPs were installed.
It said that the federal government, WAPDA, PEPCO and GENCOs failed to control pilferage of electricity from the system because of bad governance and failure of the relevant authorities to enforce the writ of the government. The government is required to improve the existing system of generation and transmission of electricity by taking all necessary steps including clearing of circular debt, etc., so that electricity can be generated to the maximum capacity. The contracts of all the RPPs – solicited and unsolicited signed off or operational right from Bhikki and Sharqpur up to Piranghaib, Naudero-I and Naudero-II - were entered into in contravention of law and Public Procurement Regulatory Authority (PPRA) Rules, which, besides suffering from other irregularities, violated the principle of transparency and fair and open competition.
On accepting the report of the Asian Development Bank (ADB), ordered by the government, nine out of nineteen RPPs were allowed to operate.
Subsequently, six out of nine RPPs were discontinued either having been signed off or having failed to achieve the target COD (commercial date of operation) whereas remaining RPPs, i.e., Karkey, Naudero-I, and Gulf Rental Power are functioning, but except the Gulf they are producing electricity much less than their generation capacity. Gulf is producing power close to the agreed capacity. Piranghaib, Multan has not generated electricity at all, although down payment was made to it, which has not been returned. As far as Reshma Power Project is concerned, though it achieved partial COD, the same was not accepted by National Electric Power Regulatory Authority (NEPRA).
Bhikki and Sharqpur were paid exorbitant rentals in billions of rupees, but generation of electricity was much below the agreed capacity.
The production from the RPPs is far below the maximum capacity agreed to between the parties as per the terms of the rental services contracts (RSCs). The cost per unit kwh is also on the very high side. These RPPs have not achieved target COD. Their contracts are not transparent. The Ministry of Finance, WAPDA, PEPCO as well as GENCOs are responsible for causing huge losses to the public exchequer, which run into billions of rupees by making 7% to 14% down payments to, and purchasing electricity on higher rates from the RPPs, therefore, steps are required to be taken to effect recovery of the amounts with mark up outstanding against the RPPs whose contracts have been signed off or who had failed to achieve COD within the stipulated time in terms of the performance guarantees.
The RPPs mode of generation of electricity proved a total failure and incapable of meeting the demand of electricity on a short term basis. The cost of electricity so produced is on very high side. Karkey and Gulf were producing only 31 to 81 MW and 51 to 61 MW at an average cost per unit kwh of Rs35 to Rs52 and Rs18 to Rs19.89 rupees respectively as per the available information, which also are subject to adjustment of fuel cost component and National Transmission and Dispatch Company (NTDC) overhead transmission charges on account of which prices are likely to increase enormously.
The judgment said that it was the constitutional requirement that every action of governmental authorities should be aimed at socioeconomic development of the country. In terms of Constitution, the NEPRA is mandated to safeguard the interests of the consumers, but its concerned officials failed to perform their duties diligently; all the government functionaries, including the Ministers for Water & Power holding charge in 2006 and onward and from 2008 to onward, during whose tenure the RPPs were approved or set up and Minister as well as Secretary Finance holding the charge when the down payment was increased from 7% to 14%, prima facie, violated the principle of transparency under Articles 9 & 24 of the Constitution. Therefore, their involvement in getting financial benefits by indulging in corruption and corrupt practices cannot be overruled. Consequently, they are liable to be dealt with under the NAB law. All the functionaries of PEPCO, GENCOs, PPIB and NEPRA along with sponsors (successful bidders) who had derived financial benefits from the RPPs contracts are, prima facie, involved in corruption and corrupt practices, therefore, they are also liable both for the civil and criminal action.•

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