New committee formed for talks with IPPs

Updated May 22, 2020

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The terms of reference for the newly constituted committee will remain same.
The terms of reference for the newly constituted committee will remain same.

ISLAMABAD: The government has constituted another committee for renegotiations with Independent Power Producers (IPPs) for recovery of ‘overpayment’ to them and tariff reduction.

A senior government official confirmed to Dawn that a new four-member committee has been constituted under a decision of the Cabinet Committee on Energy (CCoE) led by Planning Minister Asad Umar.

He said the new committee is led by former federal secretary Babar Yaqoob and comprises ex-SECP chairman Muhammad Ali, who as head of an investigation team earlier produced a detailed report on about Rs5trillion overpayment to IPPs through wrongful means. Two other members include Barrister Qasim Wadood, a lawyer from Khyber Pakhtunkhwa and a joint secretary of the Power Division yet to be nominated.

Informed sources said an earlier committee led by the PM’s special assistant on minerals and marketing Shahzad Qasim had been dissolved. When contacted, a senior official declined to confirm saying the new body would have the same terms of reference as the previous one.

The technical committee, led by Qasim, comprised Shah Jahan Mirza MD PPIB, Secretary Finance Naveed Kamran, Additional Secretary Finance Anwar Sheikh, Additional Secretary Law Zafar Iqbal, Joint Secretary Power Zafar Abbas and Chief CPPA Abid Lodhi. Abbas and Lodhi have since left the power sector.

Asad Umar, however, explained that the Qasim-led technical committee was constituted before the Mohammad Ali’s investigation report came out. Qasim, he said, would remain part of the main cabinet committee on finding ways for reduction in capacity payments to power projects under the chairmanship of Energy Minister Omar Ayub Khan.

He said the government was now working in three different directions. On one side, it was looking into state power plants while on the other hand it was separately dealing with Chinese players besides holding talks with local IPPs.

The planning minister also confirmed that CCoE had approved the constitution of a new committee led by Yaqoob even though a formal notification would be issued after the green signal from the cabinet.

Responding to a question, he said the new committee would be independent in nature and was formed after the investigation report of Muhammad Ali Committee was submitted to the cabinet which held almost every stakeholder responsible for large capacity payments and overpayments to IPPs and those accused included IPPs, public sector plants, government institutions, National Eletric Power Regulatory Authority etc.

Therefore, it was felt that an independent committee should hold renegotiations with IPPs so that objections are not raised to the effect that if the government itself was investigating things it would be hiding.

Answering another question, he also confirmed that there were some observations that inclusion of Mohammad Ali in the new committee would make it controversial at the very beginning because IPPs may not engage with it since he had raised serious accusations against them.

However, a considered decision was taken that in fact it would be more appropriate to let the IPPs question Mohammad Ali Report’s findings and get its first hand responses from the author and vice versa. There may be some unfair conclusions in the document that get settled through face-to-face interaction or be confirmed before an independent forum.

Published in Dawn, May 22nd, 2020