National Accountability Bureau (NAB) on Thursday held both the Ministry of Water and Power and Ministry of Law and Justice responsible for delay in 425MW Nandipur Power Project. However, the exact financial loss to the national exchequer has not been finalised so far due to non availability of required documents.
This was the crux of a briefing given by the NAB officials to a sub-committee of Senate Water and Power Committee headed by Senator Nauman Khattak. Senator Daud Khan Achakzai also attended the meeting. However, Senator Zaheer-ud-Din Awan, former Minister for Law and Justice, who was especially invited, did not attend the meeting. Secretary Water and Power, Younus Dagha led the team of his Ministry which included Joint Secretary Power (Finance), Zafar Abbas, Joint Secretary, (Transmission) and Joint Secretary (Water) Mehar Ali Shah.
The sub-committee held that Ministry of Law and Justice was responsible for Rs 113 billion financial loss to the economy due to delay in Nandipur Power Project where the file remained for four years. The subcommittee also decided to invite former Law Minister, Babar Awan and former Law Secretary to the next meeting to be held on March 20, 2017.
According to NAB official Zahir Shah, the then Minister for Water and Power (Raja Parvez Asharaf) and Law Minister Babar Awan were responsible for a delay in project implementation. It was confirmed that the issue was resolved during the tenure of Maula Bux Chandio as Law Minister and Syed Naveed Qamar as Water and Power Minister. NAB said that an audit on the delay in the project conducted by the Auditor General of Pakistan showed that the financial impact was Rs 36 billion whereas Nepra's report claims a loss of Rs 14 billion. Chairman sub-standing committee said that it looks that NAB went slow in its inquiry on the Nandipur power project.
The sub- committee discussed the reasons for the delay in the Nandipur power project and 969 MW Neelum Jehlum hydroelectric projects in detail. Secretary Ministry of Water and Power Younus Dagha said that both the projects were jinxed evident from their undue delay.
Dagha said that the Ministry of Water and Power is fighting with Nepra on recovery targets which maybe in prevalent in California (USA) but are not practicable in Pakistan. He plausibly argued that 100 per cent recovery is not possible in Pakistan and if tariff is based on 100 recovery then no one can avert the circular debt. Pakistan is facing issues of security and poverty, he pointed out.
Nepra assumed T&C (Transmission and Commercial) losses of 13.5 per cent against actual losses of 19 or 20 per cent. Different Discos got audit of losses from third party as per the instructions of Nepra which recommended 16.5 per cent. However, when Nepra was requested to allow benchmark losses of 16.5 percent Nepra did not entertain it which is precisely why Discos approached the courts. Dagha added that Nepra's tariff is deficient, another reason for the increase in circular debt.
Secretary Water and Power also complained that subsidy is not provided to power sector as per requirement.
"We are in constant contact with the Ministry of Finance for the last two years with respect to the release of subsidies; the government periodically announces relief for various types of consumers and we are then required to make the appropriate adjustments," Dagha added.
He suggested that subsidy should be budgeted appropriately as the Ministry has to protect low income groups, FATA and other less developed areas like Balochistan.
"If power sector performance is not up to the mark, required tariff is not allowed and subsidy is not budgeted properly, then no one can stop the rise in the circular debt," Dagha maintained.
He further stated that Rs 150 billion were added to circular debt due to low tariff given by Nepra and Rs 106 billion is to be paid by the Balochistan government.
The convener of the subcommittee maintained that subsidy should be arranged by the governments (federal and/or provincial) but Discos should not burdened for this purpose.
On a question by the convener of the subcommittee, Secretary Water and Power said that IPP Advisory Council had no value and accused it of providing fake figures of circular debt. He said that government had individual agreements with power producers and actual circular debt stood at Rs 393 billion.
The committee summoned representatives of IPPs to the next coming meeting to determine the facts of the case. Wazir said the committee would bring the situation to its logical end and determine who was presenting inaccurate circular debt data. He also directed the Power Ministry to present details of agreements with power companies. Ministry of Water and Power, however, opposed an 'eye ball to eye ball' meeting with the IPPs as the two have opposing views on different issues.
About energy mix in power generation, Dagha said that Ministry was working on it but it was not able to present details at present. He sought six months to submit details on the energy mix. He said that work on energy mix started in 2010 and an international consultant would provide input on the energy mix.
The subcommittee was also briefed that 91 per cent work on Neelum Jehlum hydropower project is complete and the first unit of 240 MW of 969 MW Neelum Jehlum hydropower project would be functional in February next year. Many questions were also raised about the project's delay and improper planning. The cost of civil works of the project has reached Rs 165 billion from the original budgeted Rs 90 billion.
The removal of Chief Executive Officers (CEOs) of Peshawar Electric Supply Company (Pesco) and Islamabad Electric Supply Company also came under discussion.
According to Secretary Water and Power, CEO Pesco has applied for a six-month leave whereas the CEO Iesco has been removed for conspiring against AMR meters project funded by the Asian Development Bank. He added that the GoP is being fined for delaying implementation of the project.
The committee also directed that use of local material and workforce be made mandatory in all power sector projects.
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