The future of dozens of power sector generation projects is in the doldrums due to indifference of Ministry of Water and Power on issuance of tariff notifications, already determined by National Electric Power Regulatory Authority (Nepra), well informed sources told Business Recorder.
The regulator, sources said, has recently sent a list of more than 80 notifications including generation tariff notifications pending with the Ministry for the last several months, some even since 2015.
"We determine tariffs and send determinations to the Ministry of Water and Power for notifications as Government of Pakistan (GoP) but their pendency is rising for the last one year," said an official on condition of anonymity.
According to the rules, it's mandatory for the Ministry of Water and Power to issue tariff notification within fifteen days of submission by Nepra and in case the tariff is not acceptable, Nepra can be approached for reconsideration of determination.
The Authority has even asked Central Power Purchasing Agency Guaranteed Limited (CCPA-G) to approach Water and Power Ministry to issue the tariff notification for Nandipur Power Project, which itself paints a picture of historic mismanagement.
Sources said that Ministry of Water and Power argues that it cannot use the powers of the federal government after a ruling of Supreme Court of Pakistan in which it was clearly mentioned that the federal government is the Federal Cabinet.
According to sources, several ministers have obtained the powers of federal government by submitting summaries to the federal cabinet, but Ministry of Water and Power's summary is still in the pipeline.
However, this has caused confusion amongst power sector investors, who have already been granted generation tariffs by the regulator, and no office is ready to hear their woes.
"Our notification is stuck with the Ministry of Water and Power and no one is ready to hear our grievances. They have destroyed investment inflow. Neither Cabinet Division nor Ministry of Water and Power listen to us. Projects are neither able to achieve financial closure nor open Letters of Credit (LCs). Without tariff notification, Energy Purchase Agreement (EPA) is not possible which implies no Implementation Agreement (IA), no financial close and no LC and the result is zero import of plant machinery," said one the investors.
Another Nepra official stated that the regulator sends reminders from time to time to the Ministry of Water and Power for issuance of notifications of different power generation companies but implementation on reminders is negligible.
Unconfirmed reports suggest that different Ministries are using powers of federal government on those issues which are of interest to them but not on issues of general public interest.
The Supreme Court of Pakistan in civil appeals No 1428, 1436 of 2016 held as follows: (i) neither a Secretary nor a Minister nor the Prime Minister are the federal government and the exercise, or purported exercise, of a statutory power exercisable by the federal government by any of them, especially, in relation to fiscal matters, is constitutionally invalid and a nullity in the eyes of the law. Similarly, budgetary expenditure of discretionary governmental expenditure can only be authorised by the federal government ie the Cabinet, and not the Prime Minister on his own; and (ii) Rule 16(2) which apparently enables the Prime Minister to bypass the Cabinet has been declared ultra vires by the Supreme Court of Pakistan.
According to sources, some of the Ministries maintain that after the Supreme Court's ruling, it was no longer tenable to use the powers of the federal government except in the manner prescribed in the decision. On the other hand, waiting for the approval of the cabinet for such routine matters is having a serious negative impact on the speed of the decision- making process.