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Minister for Law and Justice, Farooq H Naek has summoned an inter ministerial meeting on Friday (today) to devise a comprehensive strategy for 230 MW Karkey Rental Power Plant, which has threatened to go to the International Court of Justice (ICJ), well informed sources told Business Recorder.
According to Central Power Purchasing Agency (CPPA), the government was paying $9 million per month as rental charges to Karkey Power Plant that was producing 30MW electricity against 230MW committed in the agreement. In March, 2012, Supreme Court of Pakistan scrapped all agreements of rental power plants because of non-transparency in contracts.
The court also ordered National Accountability Bureau chairman Admiral Fasih Bokhari (retired) to proceed with corruption references against those who were at the helm of affairs when the contracts were signed between 2006 and 2008 to overcome the energy shortfall through RPPs as a stopgap arrangement. NAB, sources said, had summoned all the officials concerned including the former Minister for Water and Power, Raja Pervez Ashraf, who is now the Prime Minister of Pakistan, and quizzed him about his role in the shady deals.
According to a written paper, Khawaja Ahmed Tariq Rahim, advocate for Karkey Rental Power Plant in pursuance of the meeting held in the Ministry of Water and Power on May 17, 2012, further deliberations took place in Lahore on May 18 & 19, 2012 with the officials of GENCO-IV namely Anwar Brohi CEO and Faiz Ullah Dahri - Finance Director, Abdul Jabbar Sheikh - Deputy Manager RPPs Cell, officials of WPPO, Rana Mohammad Amjad - GM-WPPO, Ijaz A. Babar -Finance Director, New Thermal Projects/RPPs Cell, and with Ehsan-ul-Majeed Khan, GM-Thermal/ Focal Person deputed by PEPCO viz NAB.
According to him, accounts as prepared by GENCO in association with WPPO relating to the Karkey Rental Power Project reflect the following position: (i) the advance payment to Karkey was approximately $80 million, on basis of 14% of the rental fee. However, figures show 12% interest is charged on the entire advance payment. The interest is being worked out on basis of 1% per month.
The working will also show that Karkey till to date has been paid a sum of nearly $43.203 million as rent as per terms of the contract. The net value of units supplied by Karkey if calculated at the NEPRA approved tariff ie, cents 5.98 per units, the net value thereof is $26.955 million.
The amount payable by GENCO-IV in respect of the fuel cost component utilised by Karkey is $9.687 million. Karkey also charged interest on the additional 7% advance payment. This is on the interpretation of the judgement of the Supreme Court specifically clause (VI) and (IX) of para 84 of the Judgement where it appears that the Supreme Court is declaring that the increase from 7% to 14% was not proper. The calculations are based on interest on the additional 7%.
According to him, the figures mentioned above do not include the amount paid as withholding tax and custom duties on consumables. These, in their opinion, are not to the account of Karkey. Discussions were held with the representatives of Karkey who after deliberation with their principal stated as under:
(i) that the matter has been taken up by the Government of Turkey (Prime Minister & Foreign Minister) with the Government of Pakistan;(ii) Karkey has been advised to stay away from any negotiations, and to only follow the advice of the Turkish government;(iii) immediate steps be taken to initiate international arbitration;(iv) that Karkey is not to negotiate till such time as the restraining order in respect of the two ships is removed. A notice has been received from Karkey in terms of article vii of BIT between Turley and Pakistan.
The Karkey lawyer further added, "It should be our effort that Karkey should be dissuaded from going into international arbitration and for that purpose some comfort level has to be provided and the proper course would be that the Turkish government be requested to nominate a person to be part of a two member committee, the other member being the Secretary Water and Power to deliberate and reach a solution which could be basis of a full and final settlement keeping in view the facts and figures."

Copyright Business Recorder, 2012

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