Overpaid by CPPA-G: Senate panel recommends recovery of over Rs 39 billion from five IPPs

Senate Standing Committee on Power on Monday recommended recovery of over Rs 39 billion from five Independent Power Producers (IPPs) overpaid by the Central Power Purchasing Agency-Guaranteed (CPPA-G).

Presided over by Senator Fida Muhammad, the Standing Committee adopted a report of the Sub-Committee comprising Senator Nauman Wazir Khattak (convener), Senator Akram Khan and Senator Agha Shahzaib Khan Durrani.

According to the report, an amount of Rs 39.02 billion should be recovered from the following IPPs, i.e, Nishat Power Rs 7.116 billion, Nishat Chunian, Rs 7.819 billion, Attock Gen, Rs 11.045 billion , Liberty Power Rs 9.247 billion and Atlas Power, Rs 3.793 billion; Nepra to calculate all the amounts paid to IPPs outside the allowed tariff.

Convener of the Sub-Committee, Senator Nauman Wazir claimed that Partial Load Adjustment Factor (PLAC) incorrectly paid to IPPs, which runs into billions of rupees. He argued that revised tariff determinations need to be decided within 60 days of the decision of the committee.

The Sub-Committee observed that it appears to be a case of IPPs hoodwinking Nepra at the time of tariff determination.

"Nepra did not perform a heat rate test for these thermal power plants at the time of Commercial Operation Date (CoD). Since it appears to be a case of IPPs hoodwinking Nepra at the time of tariff determination, Nepra should initiate proceedings against such IPPs within 120 days if they have deliberately misled the regulator," the report added.

Convener of Sub-Committee also raised questions on the capacity and performance of Nepra's members and experts, saying that professionalism was lacking in Nepra's top brass and staff.

"The qualification and appropriate experience of the provincial members in Nepra need to be brought up to the required standard of an efficacious regulatory Authority. The professionalism of Nepra can be gauged from the fact that this high RoE (profits) is visible in balance sheets posted on Nepra's website but no one in Nepra bothered to question these IPPs on the RoE (during the last 6-8 years) and take remedial measures for timely rectification," the Convener of the Sub-Committee stated.

The Sub-Committee recommended that Nepra should follow competitive/reverse biding process in granting tariffs in future to the IPPs and abandon the cost plus policy at once.

The Sub-Committee also proposed that CPPA-G should withhold the GIDC amount from the IPPs which has not been paid by them.

The Minister for Power and Petroleum, Omar Ayub Khan, who did not see the recommendations of the Sub-Committee, hesitated in adopting the report and pointed out that a committee headed by former Chairman SECP, Muhammad Ali (also comprising officials of intelligence agencies) is investigating all IPPs issues. He promised to send the Sub-Committee report to the IPPs' Committee, adding that the Convener of the Sub-Committee should also meet the committee members. The committee is expected to finalise its report within the next 45 days, to be presented to the government which will subsequently be made public.

The committee argued that if contracts of all the IPPs are probed and overpaid amount is recovered, the issue of circular debt will be resolved .

On the issue of GIDC, Omar Auyb said that the Supreme Court of Pakistan is hearing the case on a fast track basis.

Managing Director Nespak, Tahir Masood gave a detailed presentation about the company's profile and its activities. He said, presently, Nespak is facing issue of overstaffing and is focusing on adjustment.

Commenting on contracts awarding process, Senator Nauman Wazir Khattak said that Frontier Works Organisation (FWO) was being awarded contracts without bidding, proposing that a level playing field which is transparent be provided in the bidding process in all contracts.

Senator Ahmed Khan and Senator Dr. Ghous Muhammad Niazi raised the issue of the company which was blacklisted by the Punjab Government and awarded contract of Peshawar Metro Bus Project.

Senator Ahmed Khan proposed that there was a need to frame rules which should allow maximum participation of local companies and contractors.

Senator Siraj Muhammad, who also presided over the Standing Committee meeting after the Chairman left the meeting half way, proposed that a mechanism should be formulated for projects to be readied on time and resources are not drained nor people feel troubled.

The committee also considered the public petition of Peer Arif. The officials of Mepco informed the committee that he worked on a line of 132 KV and he has been paid his dues. However, there are some remaining issues and as these issue will be sorted out, the 10 per cent remaining amount will be cleared. Beside others, the meeting was attended by Moulvi Faiz Muhammad, Senator Muhammad Akram Khan.