Payment to IPPs: ECC constitutes panel to finalise strategy

ISLAMABAD: The Economic Coordination Committee (ECC) that met here on Wednesday with Finance Minister Shaukat Tarin did not approve the amount of Rs89.86 billion for payment of 40 per cent as the first installment to 20 IPPs mainly because of NAB’s fear factor.

“The ECC is not a debating club, rather it is a decision-making body and in last two ECC meetings, the decision on payment to IPPs could not be taken because of NAB’s fear factor,” a senior official who was part of the meeting quoted Financed Minister as saying in the meeting.

Mr Shuakat Tarin, according to the official, has informed the ECC participants if there is a need he himself would talk to the chairman of the anti-graft body for early validation of the altered deals. However, the ECC constituted a sub-committee chaired by the Federal Minister for Finance, comprising Ministers and Secretaries from Energy, Petroleum and other ministries concerned for further deliberations on the subject. The sub-committee would finalize a strategy on how to advance with regard to payment to IPPs and would come up in the next ECC meeting with a firmed-up proposal for approval.

The chair of the meeting, the official said, admitted the fact that the bureaucracy is right while keeping itself away from taking the decision when it comes to payments of 40 per cent of the dues of IPPs unless and until the NAB clears the revised agreements with IPPs.

The official said no bureaucrat wants to face the NAB after the implementation of revised deals done with IPPs.

“The payment of 40 per cent of total dues of Rs403 billion of 47 IPPs is the first phase of implementation of the revised deals. The remaining 60 per cent payment will be paid in six months.”

Meanwhile, IPPs have shown concern over delay in payment by the government, saying any failure to pay 40 per cent of their dues would result in default of the government which is the power purchaser under the agreement. IPPs conveyed to the government in its letter saying they reserve all the rights under the amended agreements, including the right to move to the London Court of International Arbitration, if the government fails to implement the revised deals.

The NAB, which is conducting investigation on the allegations of corruption and corrupt practices against the management of Nishat Chunian Power (one of the IPPs set up under power policy 2002), has already managed to get hold of whole details starting from inking MoUs, signing master agreements and signing the amended contracts with IPPs for discounted tariff with impact of Rs836 billion in the next 20 years under Section 19 of National Accountability Ordinance to find out ‘any wrong doing’.

The Power Division after providing the whole details of the revised agreements had asked the NAB to examine the process of negotiation and agreements with the IPPs for validation. The NAB officials responded that they had received the agreements but had neither informed that these had been examined nor had validated these, stating that execution of the contracts by any ministry does not fall in its ambit and purview under Section 9 of NAO.

Even then the Power Division had sent a summary to the ECC, suggesting that unless the NAB completes its probe, the payment should not be made to IPPs installed under the 2002 power policy. The summary had also asked for halting the process to form a local arbitration tribunal to resolve the issue of excess profits of Rs55 billion unless anti-graft completes the probe.