NAB looking for ‘wrongdoing’ in altered deals with IPPs

ISLAMABAD: In an unexpected development, the National Accountability Bureau (NAB) has swung into action and started staring down with ‘doubt’ at the conversion of MoUs into altered contracts, starting from signing of MoUs with 47 IPPs up to the signing of amended power purchase agreements (PPAs) to look for ‘any wrongdoing.’

And to this effect, the anti-graft body wrote a letter to secretary power on February 10, seeking details till today (Thursday) about the MoUs, amended Power Purchase Agreements and ask for rationale to invoke local arbitration on excess profit of Rs53 billion. “This move from the NAB has made the top mandarins of Power Division jittery, who fear if the entire exercise would materialize or not,” a senior official privy to the development confided to The News. “The NAB may look into the process for any deviation from MoUs. In the MoUs signed on August 12, 2020, there is no mention of local arbitration tribunal to resolve the excess profits by 13 IPPs. Rather, it mentions that NEPRA will decide the issue through due diligence.”

Federal Energy Minister Omar Ayub Khan earlier on February 10, while talking to media men, disclosed that the National Accountability Bureau (NAB), National Electric Power Regulatory Authority (Nepra) or Securities and Exchange Commission of Pakistan (SECP) would be free to proceed against independent power producers (IPPs) for any misdeed or criminality even after they agreed to give about Rs770 billion discount over the remaining 20-year life of their contracts. It is worth mentioning that the PTI government and ‘powerful circles’ continue talks with IPPs for discounted tariff valued at Rs770 billion in the next 20 years to cope with the circular debt that has made the power sector unsustainable.

“All the stakeholders, particularly powerful circles who took the ownership of conversion of MoUs into altered PPAs till February 12, 2021 and the decision of local arbitration, feel NAB's investigation is tantamount to sabotaging the process,” one of the leading IPPs spoke to The News. The IPPs argued saying that a ‘certain lobby’ is hand in glove with authors of Mohammad Ali Report on Power Sector that highlighted excess profits, has become vibrant against the revised deals and local arbitration. The IPPs said that ‘the lobby’ knows very well that the arbitration tribunal will tear apart the Mohammad Ali Report as it carries no weight except blames.

One of the top men of Power Division said “we will send the required information along with relevant information over arbitration tribunal,” arguing in the same breath that CCOE, ECC had approved the amended contracts, payment mechanism of dues of IPPs of Rs403 billion and formation of local arbitration. Later on, the federal cabinet also ratified the approvals of CCOE and ECC.

To a question, the official said that the 13 IPPs accused of minting excess profits of Rs53 billion have also signed amended contracts after written assurances from the government that the issue would be resolved by the local arbitration tribunal within five months. The process to form the local arbitration court will be completed within one month. Among the 13 IPPs facing allegations of making excessive profits, Attock Gen is alleged to have earned illegal profit of Rs12 billion, Nishat Power Rs7.5 billion, Nishat Chunian Rs9 billion, Liberty Power Rs10 billion, and Uch Power Rs5 billion. The IPPs argue they didn’t mint any excess profits as their tariffs were worked out by NEPRA as per the PPA and the power policy under which the IPPs were set up.