SC intervention in RPPs scam helps save billions

The Supreme Court’s intervention in the non-transparent award of Rental Power Projects (RPPs) has helped save billions of rupees, besides giving warning shots to the relevant officials that they could not exercise their authority illegally and arbitrarily.
The court, after taking a suo motu notice last year against the alleged corruption in the award of RPPs, recovered Rs 4.5 billion from the Reshma Rental Generation Ltd without any mark-up. Over Rs 4.5 billion had been given in advance to the company as 14 percent mobilisation advance to set up a power plant. The company had so far failed to set up the plant.
According to a report, submitted by the finance director of the Pakistan Electric Power Company (PEPCO) in the Supreme Court last Friday, the company had returned Rs 4.576 billion without mark-up, after retaining the amount for two years.
A mobilisation advance of $55.27 million was paid to the company on October 3, 2009, after securing a bank loan at 16 percent mark-up, but the project is yet to achieve the commercial operation date (COD). The plant is producing only 55MW of electricity despite the fact that it should be adding 201MW to the national grid by now. The amount was returned after a SC bench comprising Chief Justice Iftikhar Muhammad Chaudhry and Justice Khilji Arif Hussain in a verbal order directed the company to pay back the mobilisation fund with mark-up or face legal consequences.
Similarly, on January 13, the SC had directed the Techno Energy (Pvt) Ltd Sahuwai of Sialkot to refund an advance mobilisation fund of Rs 780 million along with mark-up for its failure to import machinery for the rental power project to generate 150MW of electricity, despite having retained the money for over two years.
Likewise, on December 7, the SC had ordered the Walters Power International (WPI) and its associate headed by Iqbal Z Ahmed to return with interest the $11.28 million it had received as 14 percent advance mobilisation funds for installing rental power plants, namely the 50MW Nadudero- II and the Guddu Rental Power Project. The projects which were approved last year to generate 1,206MW could only generate some 100MW.
The National Electric Power Regulatory Authority (NEPRA) admitted before the SC that the contracts of RPPs were not transparent. NEPRA added that it was up to the court to cancel those projects or give guidelines to make them transparent.
The apex court has repeatedly noted that the RPPs were not transparent, adding that criminal cases should be registered against those responsible for irregularities. “Criminal negligence has been committed in the whole matter of RPPs, however no action has been taken against the responsible quarters,” the court observed.
According to a senior lawyer, Anwar Kamal, who is assisting the court as amicus curiae (friend of the court) in the RPPs case, not only the Energy Ordinance, 2002, but the companies and National Accountability Bureau (NAB) ordinances were also violated in the award of RPPs contracts. The case is under adjudication and now the court has to determine the officials involved in the scam. Many senior officials including former Water and Power minister Raja Pervaiz Ashraf may face legal action.
The Transparency International Pakistan (TIP), in its application to the chief justice of Pakistan, had referred to a report by the Asian Development Bank on the RPPs, which said that the procurement of 14 RPPs should have been re-tendered. The application stated that the TIP had been pointing out to the government on several occasions about the mega corruption being carried out in the RPPs, however no action was being taken on the issue.
The ADB also confirmed that the procurement of 14 RPPs should have been re-tendered due to changes in the terms offered to bidders, after the tenders were opened. The post-bid changes had benefited the sponsors. The ADB report had listed several reasons for suggesting the government to discontinue establishing RPPs in their present form. After the apex court had taken suo motu notice into the matter, two identical petitions were filed by Federal Housing Minister Faisal Saleh Hayat and Pakistan Muslim League-Nawaz (PML-N) parliamentarian Khawaja Muhammad Asif against the alleged corruption in the award of RPPs.