ISLAMABAD: Power Division on Friday accused Independent Power Producers (IPPs) of involvement in substantial over invoicing due to which costs of projects were far higher than the actual.
This was testified by Secretary Power Division, Rashid Mahmood Langrial before Senate Standing Committee on Power, which met with Senator Saifullah Abro in the chair. The issue of over invoicing surfaced during discussion on a presentation on IPPs given by Shah Jahan Mirza, who is waiting for extension in his service for next six months. The committee also enquired about the status of Shah Jahan Mirza.
Chairman Standing Committee was of the view that IPPs’ Pakistani owners who invested in rupees were given profits in dollars. He said in two years’ the entire ownership of IPPs was changed as most of the owners were Pakistanis.
Secretary Power stated that the government established Guddu power plant at a cost of $ 790 million but later on the government set up RLNG plants for $ 473 million which shows a difference of $ 350 million in cost.
During discussion on the cost of power sector projects established by the private sector, the committee asserted that cost was too high vis-à-vis international standards.
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Secretary Power validated the viewpoint of committee.
“There is no doubt that IPPs did massive over invoicing which is the main reason for the increase in cost of projects. However, GoP has contractual commitments including sovereign guarantees,” said Secretary Power.
In response to a question, he said NEPRA, the regulator, takes decisions as per understanding of its Members which benefit the power companies, adding that consumers in Pakistan do not understand the nitty-gritty of the process and other technical things like consumers in the USA.
Senator Shibli Faraz, who is the author of special report on IPPs’ profits, said he had suggested in Senate that those who signed contracts with IPPs be dug out from their graves for this crime.
Senator Fida Muhammad commented that IPPs defrauded the country.
The Committee also discussed performance of Discos with respect to circular debt and theft.
Secretary Power informed the Committee that the government intends to hand over power distribution companies to the provinces as there is no plan to private power companies.
“There is a discussion on handing over Discos to the provinces as the same model is being followed in India,” Secretary Power continued.
However, Chairman Standing Committee urged the government to assess the proposal carefully as the example of K-Electric already exists.
“K -Electric has become a ‘white elephant’ and is not paying its overdue payables to the government,” Chairman Standing Committee continued.
He maintained that handing over Discos to provinces may destroy them, adding that power theft has increased in rural areas of Sindh only because of the government change.
Other issues including 747 MW Guddu combined cycle power plant, removal of CEO Genco Holding Company Mian Muhammad Imran and Deputy Managing Director, NTDC, Ali Zain Banatwala also came under discussion.
Beside others, meeting was attended by Senator Haji Hidayatullah, Senator Ahmed Umer Ahmedzai and Senator Sana Jamali.
Copyright Business Recorder, 2022
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