Probe against IPPs expanded after resistance by some

ISLAMABAD: The government’s investigators have reportedly expanded the probe against dozens of Independent Power Producers (IPPs), after silent resistance by some of the owners, who believe they are merely adhering to contractual agreements.

Background interaction with power sector officials revealed that investigators are probing data and documents collected from the power companies’ offices as well as from the plants.

Unconfirmed reports suggest that owners of some plants are unwilling to scrap their contracts on the basis of current net value of their RoE.

Pakistan renegotiating power deals with IPPs to cut costs, minister says

The government wants to retire some IPPs from the system, as a result the government will save on all payments except RoE and offer present net value for the remaining life of the IPP which will save all other costs (in billions of rupees).

Minister for Power Awais Leghari has reiterated on a number of occasions that the government will not unilaterally alter the pact of any IPP without the owners consent as any violation of contract may attract international litigation.

The probing and officials have summoned owners of some of the IPPs, and conveyed a clear message to them: that neither industry nor any other segment of society can afford the current tariff, and urged owners to come up with suggestions to deal with the issue.

A campaign has been launched against the investigators for not consulting power sector experts, who may be in a position to offer suggestions that could resolve longstanding issues due to which the country is inflicted with a financial loss of over Rs 800 billion, in addition to capacity payments, payable without getting electricity as the demand has contracted by 8 per cent on annual basis.

Some owners of IPPs, sans Chinese plants, are allegedly using their international lenders as leverage to pressurise the government to concede on the two dozen conditions it has placed before the IPPs to revise the deals.

The Task Force, which is mandated to probe IPPs contracts, is holding its meetings in Rawalpindi at a secret location.

The sources said the Prime Minister Office (PMO) has included “fictitious loading of production cost” of nine IPPs and KE (erstwhile KESC) conducted by the SECP in August 2013, has also made part of the probe against IPPs.

According to the report, the following actions taken by the SECP: (i) financial analysis of IPPs; (ii) inspection/ investigation orders issued; (iii) coordination with National Electric Power Regulatory Authority (NEPRA); and (iv) feedback sought from statutory auditors of respective IPPs.

The power companies whose efficiency audit had been conducted are as follows;

(i) Saif Power Limited;

(ii) Liberty Power Tech Limited;

(iii) Orient Power Company (Pvt) Limited;

(iv) Sapphire Electric Company Limited;

(v) Altas Power Limited;

(vi) TNB Liberty Power limited;

(vii) Pakgen Power Limited;

(viii) Japan Power Generation Limited;

(ix) Lalpir Power Limited; and

(x) KESC.

According to the SECP probe Report, majority IPPs showed reluctance in cooperating with the inspection of the SECP. In some cases companies applied for extension in providing information. However, later the same companies moved the High Court and filed appeal against the inspection orders. The Courts granted stay to those companies, without hearing the stance of the Commission.

NEPRA insiders revealed to this correspondent that the officials of Power Division’s subordinate organizations like, CPPA-G and PPIB, also involved in probe against IPPs, are completely silent.

“These officers fear that they are being watched,” the insiders added.

Meanwhile, lawyers who have sufficient knowledge of IPPs affairs are preparing themselves for prolonged litigation at local as well as international fora.

Copyright Business Recorder, 2024