Three Rental Power Plants (RPPs) which have been declared illegal by the Supreme Court are expected to file review petitions anytime soon. On Friday, the SC declared rental power contracts non-transparent and directed the authorities to rescind these contracts.
Immediately after the announcement of the reserved judgement, National Transmission and Dispatch Company (NTDC) sent letters to 51 MW Naudero-II, Karkay Rental Power Plant and Gulf Rental Power Plant intimating them that the projects are scrapped. "In pursuance of the Supreme Court orders on RPP of March 30, 2012, the dispatch from three RPPs have been ceased with immediate effect," said, Muhammad Masood Akhtar, General Manager (SO) NPCC, in his letters. When contacted, Masood Akhtar said that the ceased RPPs were supplying about 100 MW of power to the NTDC.
"Electricity shortfall has increased by 100 MW after the NTDC served contract termination notices to the RPPs," he added. "We are considering filing a review petition against the decision," said one the sponsors of RPPs. Recently, Ministry of Water and Power, under the leadership of Syed Naveed Qamar made an effort to induct RPPs on the recommendation of incumbent Managing Director, NTDC, Rasool Khan Mehsood but the proposal was rejected by the Cabinet. National Electric Power Regulatory Authority (Nepra), sources said, had opposed inclusion of more rental power plants in the system, arguing that it would result in an additional financial burden on an consumers despite the fact that Pepco made efforts to get federal government's consent to extend billions of rupees mobilisation advance to two RPPs - Kamoki Energy and Sialkot Rental Power - from its own resources".
Pepco argued that contracts with four RPPs - Walters Power International Limited, Ruba Energy Pakistan (Pvt) Limited, Techno-E-Power (Pvt) Limited (Expansion) and Pakistan Power Resources LLC (PPR) - are being scrapped due to nil or negligible physical progress. The federal government suggested that the identified six RPPs of 838 MW, signed but not yet effective, be reviewed legally before taking any further action.
In the light of the Cabinet decision, a committee was constituted by the Ministry of Water and Power to review the contractual status of 6 RPPs. Based on documentary evidence of investment - the Engineering, Procurement and Construction Contract (EPC) and financial outlays - the committee recommended that the cases of following four RPPs may be processed further, in accordance with the contractual obligations, to meet the energy deficit in the country: (i) Kamoki Energy Limited; (ii) Sialkot Rental Power; (iii) Walters Power International Limited; and (iv) Ruba Energy Pakistan (Pvt) Limited.
For the remaining two RPPs - Techno-E-Power (Pvt) Limited (Expansion) and Pakistan Power Resources LLC (PPR) - the committee, based on sponsors' failure to fulfil their obligations in accordance with the terms and conditions of the signed Rental Services Contract (RSC) as well as non-provision of any additional documents demonstrating evidence of investment, proposed not to process their cases.
Later on, Pepco further narrowed down the number of 4 RPPs to only Kamoki Energy Limited and Sialkot Rental Power Limited (SRPL), on the basis of substantial progress at site and commitment to achieve targeted Commercial Operation Date (COD) within 120 days after the release of 7 percent advance payment.
Pepco maintained that Kamoki Energy Ltd (KEL) has served three legal notices for release of 7 percent down payment and in case of failure to release the down payment, KEL expressed its intention to initiate legal proceeding before the superior courts for recovery of heavy consequential losses and damages suffered and incurred. Former Ministers for Water and Power, Raja Pervez Ashraf and Liaquat Jatoi as well as the then Finance Minister Naveed Qamar are expected to face criminal proceedings in the NAB for increasing mobilisation advance from 7 per cent to 14 per cent.
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