Ministry of Energy Given Deadline to Justify Rs. 480 Billion in Payments to IPPs

Senate body has given a two week deadline along with a last warning to the Ministry of Energy to justify the audit paras regarding payment of Rs. 480 billion as circular debt to Independent Power Producer (IPPs).

The Standing Committee on Finance, Revenue, Economics Affairs and Narcotics Control, which met at the Parliament House, under the Chairmanship of Senator Saleem Mandviwala decided that if the Power Division of the Ministry of Energy will is not able to clarify the objections of the Audit Department within two weeks, then the case of payment of Rs. 480 billion to the IPPs would be sent to National Accountability Bureau (NAB) for investigation.

The Committee discussed the report submitted by the Sub-Committee of the Senate Standing Committee on Finance and Revenue which probed the issue and submitted the report to the main committee with the observations that the Power Division of the Ministry of  Energy failed to respond the objections raised by the Audit Department regarding the payment of Rs. 480 billion in one day to the IPPs, and most of the payments were made without completing any legal formality.

Ministry of Water and Power moved the summary to Economic Coordination Committee of the Cabinet (ECC) which met on the same day and gave approval and directed the Ministry of Finance to release the funds to Pakistan Electric Power Company (PEPCO) on the same day and PEPCO efficiently made payments to IPPs on June 28, 2013 amounting to Rs. 480 billion.

The Auditor General of Pakistan, in its audit report, indicated a number of irregularities and declared that most of the payments were made in violation of rules and regulations because payments were made through the State Bank of Pakistan (SBP) directly, bypassing the Accountant General of Pakistan Revenue (AGPR), which is the legal way for any such payment.

The Audit General of Pakistan raised more than sixteen objections on the procedure of payment adopted by the government in this regard.

In the meeting Secretary Power Division Yousaf Nasir Khokhar requested the committee to give some more time for settlement of the issues with the Audit Department, and the Committee decided to give two weeks more to report to the Committee and in case the Audit Department is not satisfied then the case of payment of Rs. 480 billion will be sent to the NAB.

The Sub-Committee highlighted three issues including the payment to the IPPs for their Idle Capacity or Un-utilization of the power, when the country was facing acute shortage of power and loadshedding was at its peak. Secondly, the Sub-Committee observed that some of the IPPs were paid to maintain their fuel reserves and the Power Division failed to explain the justification of heat test, to access the capacity of any particular IPP.

Those who attended the meeting  included Minister of Energy Awais Ahmad Leghari, Senator Muhammad Mohsin Khan Leghari, Senator Ms. Aysha Raza Farooq, Senator Kamil Ali Agha, Senator Barrister Murtaz Wahab, Senator Osman Saifullah Khan and Senator Mohsin Aziz besides representatives of Ministry of Power and Audit Department.