Karkey and the review petition

Karkey Karadenez Elektrik Uretim (KKEU) rental power plant has moved out of the sea surrounding Karachi in light of the Supreme Court verdict on rental power projects (RPPs). KKEU's representative informed Business Recorder that the ship is being shifted to another mooring near Port Qasim and its recent movement was to avail of the low tide advantage. However, he did acknowledge that the agreement for the return of the ship power plant to Turkey has been signed with the concerned authorities in Islamabad.
On 30th March 2011, the Supreme Court delivered its damning 90-page verdict on RPPs in which all RPP agreements were declared void. In its order, the court further ruled: "all government functionaries, including the ministers for water and power holding charge in 2006 and onward and from 2008 to onward, during whose tenure the RPPs were approved/set up and minister as well as finance secretary, holding the charge when the down-payment was increased from 7 percent to 14 percent, prima facie, violated the principle of transparency under Articles 9 and 24 and Section 7 of the Act 1997." These functionaries, the court ruled, would be dealt with under the National Accountability Ordinance 1999 by the National Accountability Bureau. The court observed that the RPPs generation was well below the agreed capacity while the cost per unit kWh was on the very high side. "These RPPs have not achieved target COD. The contracts of all these RPPs are not transparent...therefore, the same are hereby ordered to be rescinded forthwith." In the case of Karkey in particular, the court was informed that it was producing only 31 MW to 81 MW at an average per unit cost of 35 to 52 rupees according to the information supplied in October and November last year. The price and output fluctuation reflected the changing fuel price as well as fuel availability to the RPP.
The Cabinet under the insistence of the then Finance Minister Shaukat Tarin agreed to a third party audit which was undertaken by Asian Development Bank whose conclusions were no doubt taken into account by the court. The ADB refused to approve the 14 cabinet-approved RPPs and approved 7 as they were at an advanced contractual stage. In addition, the ADB noted with concern that the government extended 14 percent advance payment instead of the 7 percent allowed when the bidding process was ongoing and suggested that the bidding awards must be scrapped and bidding re-launched for transparency. And of most concern to all was ADB's contention that the RPPs would not have the capacity to meet the energy shortages and that the government's assurance to the RPPs that it would ensure the supply of fuel was flawed as it was in no position because of serious gas shortages and the lack of the appropriate infrastructure.
The government has challenged the verdict arguing that the RPPs were a short-term measure and would have assisted in bridging the energy gap as well as allowing routine repair and maintenance work to be carried out by power generating companies. The review petition further contends that the court's direction to take criminal action was not supported by any evidence or material submitted by the original petitioners namely Faisal Saleh Hayat (PML-Q) and Khawaja Mohammad Asif and argued that going after the functionaries was against the principles of natural justice and against the spirit and letter of Article 10-A of the constitution. The court granted two more weeks to the counsel for the Pakistan Power Resource who pleaded that due to Eid holidays preparations for the case were not complete.
The general public remains convinced that the RPPs were controversial especially in the light of the findings of the independent audit by ADB and many argue that NAB has not carried out due diligence in the case. The court directed investigations against individuals in several departments, ministries as well as Wadpa, Gencos and Pepco may take several years; however the fact of the matter is that the NAB must at least be seen to be investigating as per the court's directives rather than dismissing all charges for lack of evidence especially given the fact that RPP contracts are in black and white and changing the rules mid-way after bidding is completed should automatically raise several questions.