KE, govt entities: FD shares details of disputed unpaid subsidy claims for mediation

ISLAMABAD: The Finance Division is said to have shared the details of disputed unpaid subsidy claims of over Rs66 billion among, K-Electric (KE), Power Division and Finance Division, which are to be shared with the mediator for mediation, well-informed sources told Business Recorder.

Mediator, former Attorney General for Pakistan, Ashtar Ausaf Ali, has started the mediation process between K-Electric (KE) and government entities in pursuance of the notification of February 23, 2024, issued by the Power Division and the Mediation Agreement of February 16, 2024.

A high-level timeline and terms of reference for the mediation process were previously shared with all parties via e-mail on February 19, 2024.

KE and govt entities: ECC approves PD proposal for signing various draft agreements

The sources said as per clause 2 of the Mediation Agreement, the parties have agreed to submit the following claims to mediation; (i) what is the amount of outstanding receivables of KE from KWSB (Karachi Water and Sewerage Board); (ii) what is the amount of tariff differential subsidy owned by GoP to KE, including but not limited to any procedural delays; (iii) what is the amount of payable by KE to National Transmission and Despatch Company (NTDC); (iv) what is the amount payable by KE to SSGC; and (v) whether any other payments are due to the parties.

Finance Division, sources said, has nominated Ch. Saeed Ghani, Deputy Secretary (CF-II) to represent Finance Division on K-Electric’s mediation.

According to Finance Division, following is the disputed unpaid subsidy claims among KE, Power Division and Finance Division; (i) TDC claims for the period Jan to Dec 2014, Rs12.672 billion; (ii) TDS claims for the period up to FY 2011, Rs10.388 billion;(iii) TDS claims against Industrial Support Package (ISP), Rs34.529 billion; (iv) TDS due to removal of 4 per cent Cap, Rs6.037 billion; and (v) GLMP claims, Rs2.618. The total unpaid dispute amount has been calculated at Rs 66.244 billion which is also sub-judice.

The Finance Division has also shared minutes of a meeting held on February 7, 2019, on the request of K-Electric and Power Division.

CFO K-Electric had stated in the meeting that pending claims of TDS of Rs12.672, ISP, GLMP and 4 per cent Capping were submitted in accordance with the Power Division’s notifications, while the same have been lingering since long. It had been farther emphasized that as to why K.E is made to suffer and ECC’s decisions were not being implemented. They require clear directives of the GoP through notifications by the Power Division for corrective measures to materialize recovery of their subsidy claims. The Finance Division had agreed to that extent for appropriate necessary actions by the Power Division.

As per the Terms of Reference, the obligation of the mediator are; (i) ensure the Terms of Reference set forth during the initial stages of mediation are adhered to at all times by the parties; (ii) report any conflict of interest or other relevant matter which may call into dispute the integrity of the mediation process; (iii) attend any meeting related to the mediation process, procedure, terms, etc. called by the parties or the mediator; (iv) contract representatives of the parties involved and relevant stakeholders before and during the mediation to assist in facilitating and driving the mediation to a mutually agreeable outcome; (v) ensure every effort to manage the process effectively and efficiently to the best of the mediator’s knowledge and experience and without any influence caused by internal or external factors; (vi) provide parties involved with equal and sufficient opportunity to represent their position and encourage their involvement in the decision making process ; and (vii) explain all the details of the mediation process to the parties and/or representatives as reasonably needed.

Obligation for the parties; the parties involved shall; (i) agree and adhere to the Terms of Reference set forth by the Mediator; (ii) each prepare and provide a summary of their claims and share all documentation requested in a timely manner; (iii) appoint a key contact/resource dedicated to facilitating the mediator; (iv) ensure a lead representative of the party with full authority to settle the dispute attends the mediation and signs the mediation agreement and any potential settlement agreement; (v) ensure they act in an honest, respectful, responsible manner, and in good faith throughout the mediation; (vi) agree to abide by the signed mediation agreement and any potential settlement agreement; (vii) abide by the privacy and confidentiality provisions throughout the mediation process; (viii) report and alert the mediator to any conflict of interest that may arise during the process; (ix) adhere to the timelines set forth for the mediation and do their best to ensure there are no delays; and (x) attend all joint meetings and prioritize their availability for individual meetings requested or sought by the mediator.

Core Obligations for all; - all parties shall adhere strictly to the following privacy and confidentiality clauses; (i) ensure persons present at mediation sessions are only those authorized and approved to be involved, and if involvement of other persons in the mediation is required, consent of all parties shall be required; (ii) if any party cause themselves to be represented, such representative shall have the authority to perform all legal acts that are necessary for the mediation, including entering into agreement(s).

Copyright Business Recorder, 2024