Liabilities among KE, NTDC, SSGC: Government proposes appointment of retired SC judge as arbitrator

The federal government has proposed appointment of a retired judge of Supreme Court (SC) as arbitrator to resolve the issue of liabilities amongst Karachi Electric (KE), NTDC and SSGC. This was disclosed by Secretary Power Divison, Irfan Ali at a meeting of Senate Standing Committee on Power, presided over by Senator Fida Muhammad. The representative of KE, Aamir Zia who attended the meeting briefed the committee about the power utility's settlement mechanism, but opted to remain silent on the issue of liabilities, saying it is already in process and to let the process be completed.
During the briefing Secretary Power Division who claimed safeguarding national interests in KE's deal, said that KE also has other issues like liabilities with Power Division, NTDC and SSGC - the main hurdles in smooth transaction of KE from M/s Abraaj to M/s Shanghai Electric Power (SEP). The cumulative liabilities against KE are of Rs 125 billion of which the amount of NTDC is Rs 35 billion whereas the remaining amount belongs to SSGC.
Secretary briefed the committee that when KE was sold to M/s Abraaj Group, acquisition of National Security Certificate was made mandatory in case power utility is sold to another party.
Secretary Power Division further stated that if liabilities are shown on the KE's balance sheet then M's Abraaj would not get the much talked about price of its shares.
Secretary Power Division informed the committee that Power Division has proposed Privatisation Division to go for an out-of-court settlement with the KE.
According to him CCoE, in its meeting presided over by former Prime Minister, Shahid Khaqan Abbasi, had decided that liabilities should be determined by a third party auditor, adding that SSGC signed the ToRs but KE did not due to which that mechanism became ineffective. KE has also claims against KW&SB and interest on delayed payments.
He said the KE transaction has come out from a deadlock like situation, and suggested that since the government has given substantial concessions, the power utility should also reviews its stance.
"We want Shanghai should come but we are government officials, how can we ignore the liabilities?" he added.
Senator Nauman Wazir Khattak argued that issues in KE's transaction should be resolved as this is earning a bad name for the country. Secretary Power Division stated that Power Division has made all out efforts in this regard and now Privatisation Division is trying to sort it out.
"We want a fair decision. I hope it will be resolved within one and half months time," he maintained.
The committee supported payment of Rs 5 billion instead of Rs 3.5 billion to the land owners of Suki Kinari hydropower project. The committee, in this regard will write to the concerned quarters. The committee also recommended that Rs 60 million be released for infrastructure in Kohat -II which, according to CEO Pesco, is free from theft.
The committee was also informed that in FESCO Afghan refugee camps are defaulters of Rs 250 million. In PESCO electricity connections were given to 15 refugees camps. In Pesco Rs 240 million is outstanding against Afghan refugee camps. In Tesco Rs 1.4 million is outstanding against three camps and Rs 1 million is outstanding against refugee camps in Qesco.
While discussing the implementation status of recommendations, the Committee deliberated over the issue of reallocation of funds for the completion of electrification schemes of District Mansehra and Kohat. Taken up for the third time since December 2018, the Committee recommended that the Power Division arrange for provision of 20 percent funds for completion of remaining work of various approved schemes of 'Rehabilitation of Electricity Distribution Infrastructure. Secretary Power Division, Irfan Ali told the Committee that electrification projects fall in under-developed areas and considering the quantum of work, the time period of three months, since the date of sanction of funds was not sufficient to complete the project during the FY 2017-18. He said that according to an office memorandum dated 26 April, 2018 no money can be drawn for deposit into chest or transfer to company's bank account after FY 2017-18. Pesco took up the matter with AGPR Sub Office Peshawar after which directions were conveyed in writing that no payment is to be authorized after the closure of the current Financial Year 2017-18 for the current year's budget. It was revealed that funds of PKR 229 million had been sanctioned for execution of power infrastructure schemes in various areas in district Mansehra and Abbotabad and PKR 298 million for rehabilitation of electricity distribution infrastructure in District Kohat. The Committee was informed that out of these funds an amount of PKR 238 million has been utilized and the balance amount of PKR 112 million and PKR 60 million remain unutilized respectively. In view of the importance of the scheme, especially the development of Kohat, the Committee recommended that 60 million of the 298 million be paid immediately so that the project may be completed.
While taking up the matter of payment of the Federal Government share to the Sindh Irrigation Department by 22 April, 2019 as per commitment in favour of XEN Bengari Sindh Feeder Division Kashmore, Chairman Committee, Senator Fida Muhammad stressed the need for the third and last instalment of PKR 670 million to be paid immediately so that the project may be completed.
While discussing the issue of electricity connections given to Afghan Refugee Camps in the country, Senator Nauman Wazir Khattak was of the view that all connections must be allocated as per NEPRA rules and that bulk supply of electricity must be stopped to the camps.
Scrutiny of Public Sector Development Program (PSDP) proposed by the Ministry of Energy (Power Division) for the next financial year was deferred on the request of the Ministry and will be taken up exclusively in the next meeting.
The meeting was attended by Senator Moula Bux Chandio, Senator, Senator Mushahid Ullah Khan, Senator Muhammad Akram, Senator Syed Muhammad Ali Shah Jamot, Senator Dilawar Khan, Senator Nauman Wazir Khattak, Senator Shamim Afridi, Senator Lt. Gen (R) Salahuddin Tirmizi and senior officers of the Power Division, NTDC, TESCO, PEPCO, PESCO, K-Electric.