IPPs inquiry commission put on ice

ISLAMABAD: The government has reportedly decided to put on ice the inquiry commission on Independent Power Producers (IPPs) tasked to conduct a thorough probe and the release of the inquiry report for at least two months aimed at using the report as bargaining chip for a better deal on power tariff , well-informed sources told Business Recorder.

The decision was taken by the federal cabinet in its meeting held on April 28, 2020, with Prime Minister Imran Khan in the chair. It is unclear which cabinet member floated the idea to shelve the establishment of inquiry commission by altering the cabinet decision of April 21, 2020. Two senior cabinet members own IPPs and have been subjected to harsh criticism for conflict of interest.

The cabinet minutes seen by this scribe state that “In order to provide a chance of meaningful negotiations with the IPPs, constitution of Inquiry Commission under Pakistan Commissions of Inquiry Act, 2017 may be deferred for two months. Release of report would be decided thereafter.”

Minister for Railways, Sheikh Rashid Ahmed said in an interview with a private TV channel said that IPPs inquiry report was not shared during the meeting of Cabinet Committee on Energy (CCoE).

A nine-member committee headed by Muhammad Ali, in its inquiry report, accused IPPs of inflicting over Rs 4.5 trillion loss to the exchequer during last 13 years and urged the government to recover the amount paid to them illegally.

IPPs, however, have sent a rebuttal to the government, rejecting almost all of the claims of the committee. When the issue of IPPs landed in the federal cabinet on April 21, the enthusiastic cabinet members, while endorsing the proposal of the CCoE, agreed that the report on IPPs should immediately be made public in the interest of good governance, transparency and accountability. The Cabinet members at the time contended that a definite and non-extendable timeframe of 90 days be given to the Inquiry Commission to submit its report and that its ToRs should be carefully drafted and sufficient budgetary and human resources must be placed at the disposal of the Commission. The cabinet was also informed that NAB had also taken cognizance of the report on IPPs.

A technical committee headed by a Special Assistant to the Prime Minister on Power held a meeting with the representatives of IPPs in the presence of Minister for Power Omar Ayub and Secretary Power, Irfan Ali. IPPs had sought time to give their formal version on the Terms of References (ToRs), some of which were not acceptable to them.

As the government announced to constitute an Inquiry Commission to carry out forensic audit and to complete its proceedings and report within 90 days. IPPs requested the authorities to put technical committee on the ice until the Inquiry Commission approved by the Cabinet completes its assignment as IPPs argued that the committee’s report had glaring gaps with respect to profits.

On April 21, 2020, Minister for Power Omar Ayub, while drawing the attention of ongoing commercial negotiations with IPPs, pointed out that these would need to be suspended till the report of the Inquiry Commission. It was further emphasized that in this attempt to investigate the sector care should be exercised to ensure that genuine investors are not discouraged and at the same time projects of national importance such as CPEC should not further suffer unduly.

The report maintains that 16 IPPs invested around Rs 60 billion and earned Rs 600 billion in profit in a period ranging from two to four years. Three cabinet members are also under pressure after the report appeared in the media.

During the first meeting of the committee constituted by the CCoE, Minister for Power, Omar Ayub emphasized the need to reduce and provide relief to the public through lower cost of electricity and resolve the quantum of capacity payments.

Chairman IPPAC, Khalid Mansoor argues that IPPs are ready to engage with the government for a meaningful dialogue keeping in view the scenario of Covid-19 and want to play their role to provide relief to the government but if the government wants to unilaterally scrap the PPAs, the IPPs will not hesitate to move the London Court of International Arbitration (LCIC).

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