Capital suggestion

Fact 1: On December 3, 2007 the chief executive of Pakistan Power Company Limited (Pepco) wrote a letter to Luo Xiaoming, general manager thermal, Dongfang Electric Corporation (DEC). The subject of the letter: “Provisional Letter of Intent (PLOI) for combined cycle power plant at Nandipur Pakistan.”
The letter states: “Further to the presentation of your revised proposal to the PEPCO Board of Directors on 3rd December 2007, the PEPCO Board of Directors has authorized issuance of Provisional Letter of Intent for the subject Project….”
Under paragraph C, ‘Price of Project’, the letter states: “The price confirmed by DEC is equivalent to US$329 million…..” For the record, the Ministry of Water and Power does not dispute that amount.
Fact 2: May 20, 2014 the chief executive officer of the Northern Power Generation Company, the company that owns the Nandipur Power Project, filed a petition with the National Electric Power Regulatory Authority (Nepra). Under paragraph 4, titled ‘Project Cost’, the total project cost stands at $847 million.
Fact 3: The difference between $329 million, the original cost of the project, and $847 million, the final expenditure claimed by the Northern Power Generation Company, the company that owns the Nandipur Power Project, is a wholesome $518 million.
Conclusion: The focus of an audit report has to be the over-expenditure of a massive $518 million. How did the government end up spending an additional $518 million on a project that was originally estimated to cost a total of $329 million?
Just imagine: over the past eight years $518,000,000 of Pakistani taxpayers’ money has evaporated in thin air and an audit report authored by the auditor general of Pakistan (AGP) is now talking about “inflation and exchange rate fluctuations”. The cost has gone up from $329 million to $847 million and that has absolutely nothing to do with ‘exchange rate fluctuations’.
Fact 4: Between December 3, 2007 and 2015, we have seen four presidents – Pervez Musharraf, Mohammadmian Soomro (acting), Asif Ali Zardari and Mamnoon Hussain. Between December 3, 2007 and 2015, we have seen five prime ministers – Mohammadmian Soomro (interim), Yousaf Raza Gilani, Raja Pervez Ashraf, Mir Hazar Khan Khoso (interim) and Nawaz Sharif.
Just imagine: over the past eight years $518,000,000 of Pakistani taxpayers’ money has evaporated in thin air and no one – absolutely no one – has been found responsible for the loss.
Congratulations, the Nandipur Power Project is “producing 425MW of electricity”, claims the minister of water and power. On May 20, 2014 the chief executive officer of the Northern Power Generation Company, the company that owns the Nandipur Power Project, filed a petition with the National Electric Power Regulatory Authority (Nepra) claiming that the generation cost stands at Rs18.17 per kWh while Nepra has allowed a tariff of Rs11.30 per kWh.
For the record, the Nandipur Power Project may indeed be producing 425MW of electricity but the government would have to provide a subsidy of Rs2.5 billion per month every month of the year for a total of Rs30 billion a year. Or alternatively, the circular debt is bound to go up by a wholesome Rs30 billion a year.
On May 21, 2013 the Public Procurement Regulatory Authority (PPRA) blacklisted Dongfang Electric by posting a warning for all “other companies not to carry out business with Dongfang Electric Corporation.”
How much is $518 million? Well, Balochistan’s annual education budget for its 13 million residents is $385 million. And Khyber Pakhtunkhwa’s annual health budget for its 28 million residents is $300 million.
The writer is a columnist based in Islamabad. Email: farrukh15@hotmail.com
Twitter: @saleemfarrukh