LAHORE, Oct 9: Independent power producers invested $67,000 million under a policy framework announced by Paksitan in 1994 and the country cannot dishonour its own policy commitments, Wapda counsel Tariq Kamal Kazi told a three-member bench of the Lahore High Court on Tuesday.

The lawyer submitted that contracts are freely-negotiated solemn agreements and can be avoided only for two reasons — either the consideration is illegal or the object is illegal.

The object of the contracts with the IPPs is generation of electricity and the consideration is the price that Wapda pays as the sole purchaser.

He said the performance of its contractual obligations has become difficult for Pakistan because the entire power production policy in the private sector was premised on an estimated 8 per cent growth in the demand for electricity.

The actual growth is only 2.5 per cent, hence surplus generation capacity.

The federal government or Wapda cannot, however, turn around and refuse to buy the electricity generated by private producers, who have taken huge loans and invested them in Pakistan. How will then repay their loans and what will be the fate of Pakistan’s sovereign guarantees in the world of trade and business?

The counsel conceded that the performance of contracts has run into difficulties but asserted that it is still not impossible. Commercial problems cannot be resolved in exercise of constitutional jurisdiction. Individual grievances can be taken up with the individual IPP and Wapda has already renegotiated contracts with most of IPPs. But the contracts cannot be scrapped by an omnibus order as desired by the petitioner.

The bench, which consists of Justices Amir Alam Khan, Karamat Nazir Bhandari and Hamid Farooq, will continue its proceedings on Wednesday.

It has two public interest petitions before it, one filed by Wapda workers and the other by a private citizen.