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Declaring all Rental Power Projects (RPPs) illegal, the apex court on Friday ordered their immediate shut down, besides directing for initiation of legal action against former federal ministers Liaqat Jatoi and Raja Pervez Asharaf, and all the others responsible for bringing the country’s effectively working sector to its knees.
A two-member bench, comprising Chief Justice Iftikhar Muhammad Chaudhry and Justice Khilji Arif Hussain, also directed the government for taking effective steps to arrest corruption and pilferage in the power sector.
Announcing its verdict in RPPs case - which was held in reserve on December 14, 2011 - the bench said that rules and regulations were violated in these projects due to which the national exchequer witnessed losses of billions.
In the detailed judgment in the case, the court directed National Accountability Bureau (NAB) chairman to proceed against “ministers for water and power holding charge in 2006 and onward and from 2008 to onward, during whose tenure the RPPs were approved/set up and minister as well as secretary finance holding the charge when the down payment was increased from 7% to 14% and submit fortnightly progress report to Registrar for perusal in chambers.”
Liaqat Jatoi was water and power minister during the Musharraf regime and Raja Pervez Ashraf held this portfolio in 2008, while Shahid Rafi was secretary ministry of water and power in whose term the RPPs were approved.
In the 90-page judgment, authored by the chief justice, the court observed that “prior to the introduction of RPPs, the electricity generation system had sufficient potential to produce more electricity, but instead of taking curative steps… billions of rupees were spent on Bhikki and Sharaqpur RPPs, which proved complete failure because the object could not be achieved as the shortage of electricity persistently continued, and yet more RPPs were installed.”
The verdict further holds the finance ministry, Wapda, Pepco and Gencos responsible for “causing huge losses to the public exchequer”, which run into billions of rupees “by making 7% to 14% down payments” to RPPs and “purchasing electricity on higher rates” from them. The bench also declared the RPPs “incapable of meeting the demand of electricity on a short term basis”.
The judgement read: “The contracts of RPPs are ordered to be rescinded forthwith and all the persons responsible for the same are liable to be dealt with for civil and criminal action in accordance with law.” The verdict noticed that the production from the RPPs was far below the maximum capacity agreed between the parties as per the terms of the RSCs and the cost per unit kWh was also very high, and the contracts of all these RPPs were not transparent.
“All the functionaries of Pepco, Gencos, PPIB and Nepra who derived financial benefits from the RPPs contracts are, prima facie, involved in corruption and corrupt practices, therefore, they are also liable both for the civil and criminal action.”
All the relevant government functionaries, including the ministers and secretaries, who served during the aforesaid period of time, “prima facie, violated the principle of transparency under Articles 9 and 24 of the constitution and section 7 of the Regulation of Generation, Transmission and Distribution of Power Act, 1997, therefore, their involvement in getting financial benefits out of RPPs by indulging in corruption and corrupt practices cannot be overruled. Consequently, they are liable to be dealt with under the NAB Act-1999 by the accountability bureau.
The court lauded the role of Faisal Saleh Hayat and Khawaja Asif for highlighting the corruption and corrupt practices in RPPs contracts. Faisal Saleh Hayat through a press statement published in daily The Nation on 8-9-2009 had urged the court to take action in respect of RPPs. On December 15, 2011, chief justice took the suo motu notice on applications of then Housing Minister Syed Faisal Saleh Hayat and Khwaja Asif.
The verdict said the federal government, Wapda, Pepco, Gencos had failed to control pilferage of electricity from the system because of bad governance and failure of the relevant authorities to enforce the writ of the government. It directed the government “to improve the existing system of generation and transmission of electricity, by taking all necessary steps, including clearing of circular debt, so that electricity can be generated to the maximum capacity.”
“The RPPs mode of generation of electricity has proved a total failure and incapable of meeting the demand of electricity on a short-term basis. The cost of electricity produced by RPPs is very high and is not commensurate with the provisions of section 7 of the Act, 1997.”
“It is the constitutional requirement that every action of governmental authorities should be aimed at socio-economic development of the country… In terms of the constitution and the Act, the Nepra is mandated to safeguard the interests of the consumers, but the concerned officials of Nepra failed to perform their duties diligently.”
The Economic Coordination Committee decision dated September 10, 2008 has been violated blatantly, the court noted, saying that as per latest report, Karkey and Gulf are producing only 31 to 81MW and 51 to 61MW at an average cost per unit kWh of Rs35 to Rs52 and Rs18 to Rs19 rupees respectively. Thus, it is clear violation of the rights guaranteed to the citizens in terms of Articles 9 and 24 of constitution and the Power Act, 1997.
“The contracts of all the RPPs - solicited and unsolicited, signed off or operational, right from Bhikki and Sharaqpur upto Piranghaib, Naudero-I and Naudero-II - were entered into in contravention of law/PPRA Rules, which, besides suffering from other irregularities, violated the principle of transparency and fair and open competition, therefore, the same are declared to be non-transparent, illegal and void ab initio.”
The court observed that on accepting the ADB’s report, 9 out of 19 RPPs were allowed to operate. But 6 out of 9 RPPs were discontinued either having been signed off or having failed to achieve the target COD whereas remaining RPPs, Karkey, Naudero-I and Gulf are functioning, but they are producing electricity much less than their generation capacity, except Gulf which is producing electricity close to the agreed capacity. PPR (Piranghaib, Multan) has not generated electricity at all, although down payment was made to it, which has not been returned.
As far as Reshma is concerned, though it achieved partial COD, but the same was not accepted by Nepra. Bhikki and Sharaqpur were paid exorbitant rentals in billions of rupees, but generation of electricity was much below the agreed capacity.
The court directed the authorities concerned to take steps for “recovery of the amounts with mark up outstanding against the RPPs whose contracts have been signed off or who had failed to achieve COD within the stipulated time in terms of the performance guarantees”.
Agencies add: Minister for Water and Power Syed Naveed Qamar on Friday said that the National Transmission Dispatch Company (NTDC) would release notices of termination of contracts to all Rental Power Projects (RPPs) the same day in line with the Supreme Court’s order.
He said this while talking to reporters here after attending the concluding ceremony of an energy conference held at COMSTECH building titled ‘Pakistan’s Energy Options’
(The Nation)
Pakistan Cyber Force
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