News
Friday, October 29, 2010
SC smells a rat in RPPs contracts* CJP says things not going right as arbitration being done in London while sellers and buyers are Pakistanis
* Public suffering due to purchasing electricity on high rates
Staff Report
ISLAMABAD: Prima facie things are not going in the right direction as arbitration is being done in London when both the sellers and buyers are Pakistanis, Chief Justice of Pakistan (CJP) Iftikhar Muhammad Chaudhry said on Thursday.
He observed this while heading a three-member Supreme Court bench, which was hearing pleas regarding allegations of corruption in the rental power projects (RPPs) contract and the government’s decision to increase electricity tariff, especially when the supply was irregular.
The other members of the bench were Justice Ghulam Rabbani and Justice Khalilur Rehman Ramday. The CJP observed that general consumers were suffering a lot due to the government’s decision to purchase electricity on high rates.
He said the Asian Development Bank (ADB) report levelling serious allegations of corruption in awarding the contract of RPPs would not be ignored while deciding the matter.
The court directed Khawaja Tariq Rahim, counsel for the Water and Power Ministry and PEPCO, to prepare a complete synopsis of the RPPs and present it before the court on the next date of hearing. He was also directed to provide complete infrastructure of the RPPs in the next hearing.
He was further directed to inform the court how much money had been spent on the RPPs. It asked him why the government had purchased electricity on high rates, as its burden would ultimately shift to the general consumers.
Justice Ramday asked, “Had the government intimated the general public that they will have to pay heavy costs due to the RPPs?” Rahim said the power rates would not be compared to the rates of independent power producers. The CJP asked him about the place of arbitration on the dispute, to which he replied that it could be held in the courts of London.
The court inquired the counsel why 14 percent had been paid in advance to the RPPs instead of the agreed seven percent. The counsel said since Pakistan had a low economic rating, the banks were not ready to openly confirm the standby letter of credits, thus they had to pay 14 percent in advance.
The counsel presented before the court a chart of Pakistan’s economic rating from 2007 to date. He said the government had paid Rs 700 million in advance in a contract of Pakistan Power Resources in Guddu, however he added that the government later abandoned the contract due to technical reasons. He said the amount would be returned in the next two weeks, as the government possessed a bank guarantee.
Courtesy www.dailytimes.com.pk