EDITORIAL: National Accountability Bureau (NAB) has cleared the deals between the government and the independent power producers (IPPs). The government has projected that these deals would save around 770 billion rupees over the on average 10 years remaining of the contractual life of 46 IPPs producing around 8000MW of electricity. This saving is only 19 percent of the total estimated loss of at least 4 trillion rupees to the exchequer from 2007-19 due to alleged power sector irregularities including subsidies and other liquidity injections with IPPs investing 60 billion rupees and earning around 400 billion rupees and therefore the obvious concern was that members of the negotiating team may face a NAB inquiry at a future date, particularly when the Pakistan Tehrik-i-Insaaf is no longer in government.
This preemptive approach adopted by the government is not the first time an elected administration has sought clearance from NAB during its tenure. Shahid Khaqan Abbasi of PML-N sought NAB clearance on the 15-year Liquefied Natural Gas (LNG) deal with Qatar in spite of the fact that critical elements of the deal were redacted as per an agreement with Qatar, and remain redacted to this day. It is therefore relevant to note that NAB Karachi wrapped up its 17-month inquiry against Shahid Khaqan Abbasi, the then Petroleum Minister, in December 2016 in his alleged role in the LNG deal on merit because as per the then Director NAB Karachi “after exhaustive discussion it has been decided that it is an ongoing project and any intervention by NAB at this juncture will jeopardize the efforts of provision of LNG from the project of public/national importance.” NAB, however, noted that “it has been established that management of Inter State Gas Systems (ISGS) and Sui Southern Gas Company Limited (SSGCL), in non-transparent manner, selected M/s Engro as a successful bidder for LNG terminal at port Karachi.” The 2016 clearance did not stop NAB from arresting Shahid Khaqan Abbasi in July 2019 on awarding the contract to Qatar.
In this context, concerns were publicly voiced by former Prime Minister Nawaz Sharif and echoed by Prime Minister Imran Khan on the pervasive threat of action by NAB as a major impediment to not only private sector investment but also bureaucrats whose support in issuing relevant approvals began to suffer. An ordinance was issued to deal with these concerns but it has lapsed since. It is equally important to note that there have been some court decisions that have delayed the implementation of government policies that are the executive’s prerogative; for example, the privatisation of Pakistan Steel Mills that has cost the treasury billions of rupees annually since the time the mills became nonoperational in 2015 as well as decisions that should have best been left to the administration of the day rather than to the courts; for example, the decision to reduce the price of sugar which could not be unimplemented. Other verdicts have led to large penalties payable by the treasury for failure to meet its contractual obligations and the most recent example is the amount paid to Broadsheet LLC and the decision by the London Court of International Arbitration (LCIA) to pay around 14 billion rupees (135 million dollars), including a markup, to a group of nine local power producers for breaching contractual obligations.
One major change evident during the ongoing tenure of the Khan administration has been to mirror selection of members of a negotiation committee with the composition of a Joint Investigation Team. While many may object to this composition yet the fact remains that the Khan administration has been more successful in reaching an agreement that was considered difficult if not impossible (with the IPPs) as the pressure on the opposing protagonist not to peremptorily leave the table and go for international arbitration to the detriment of national interest visibly rose. Prime Minister Imran Khan praised NAB recently (4 January 2021) in a tweet for recovering 389 billion rupees in 2019 and 2020 in comparison to the previous 10 years (2008-2018) recoveries of 104 billion rupees. However, this amount is trivial compared to the extent of corruption in the country and the general perception that plea bargain is under 15 to 20 percent of the total amount of corruption/irregularity unearthed and is therefore a means to legalize the bulk of ill-gotten wealth.
There is, therefroe, a need to deal with these issues through a three-pronged strategy: one, of course, is to ensure that all contracts are signed after due diligence and debate in parliament for otherwise this vicious cycle of every administration accusing its predecessor of corruption with respect to a signed contract will continue with millions of dollars worth of losses incurred as the other party goes for international arbitration; second, it is the prerogative of the executive to prioritize projects. Allowing NAB to arrest opposition members on the basis of prioritizing a project like a sports complex will, therefore, open the window for the next government to challenge the incumbent’s priorities; and finally NAB’s role must be revisited, including allowing a board of independent members from the private sector to decide who is to be investigated.
Copyright Business Recorder, 2021
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