President shelves small dam projects

ISLAMABAD: President Asif Ali Zardari has ordered an investigation into an unusual 180 per cent increase in the cost of five small dams in just a year and asked the authorities concerned to shelve the projects.

Sources told newspaper on Thursday that the president was surprised to know that the cost estimates had increased because of inclusion of unnecessary and irrelevant components in feasibility studies. He verified facts about the power generation and water storage capacity of the dams from the ministry of water and power and the Planning Commission and expressed displeasure over reports that some people had tried to misuse his name during the approval process. The president asked Minister for Water and Power Raja Pervez Ashraf and the Planning Commission to identify viable alternative projects in the water sector to utilise a $700 million loan offered by China.Officials said that the president’s intervention had saved about Rs64.5 billion. One official said that the president had approved the projects after having been informed at a briefing a few months ago that over 40,000 poor people would benefit from them, but he was not aware that they would generate only 9.5 megawatts of power and store 460,000 acre feet of water. Some government officials added soft components to the projects. A Rs1.6 billion component of solar pumps was added to the Naulong dam whose per unit electricity cost was over Rs136, although it could have generated 4MW from its own water releases. Similarly, Rs850 million was allocated for solar pumps at Darawat dam. And a Rs3.75 billion component for development of command area with high efficiency irrigation system was added to the project.

RPPs hired in 2007 produced nothing, got $216m: Faisal

ISLAMABAD: Former federal minister Faisal Saleh Hayat, who has been a vociferous opponent of the rental power projects and a harsh critic of Minister for Water and Power Raja Pervez Ashraf, could only dredge up his own government’s wrongdoing when asked to prove that the Pakistan People’s Party had taken kickbacks and caused a loss to the national exchequer by agreeing to RPPs to overcome electricity shortfall.

It was ironic to watch Mr Hayat, a Musharraf-era minister, censuring the government for having learnt no lessons from his own government’s wrong decisions under which two RPPs were set up in 2007 which completed the three-year contract period without generating a megawatt of electricity despite having been paid $216 million as rent. Mr Hayat, who had been summoned by a three-judge Supreme Court bench hearing allegations of corruption in the RPPs on a suo motu notice, cited a report by the Auditor General of Pakistan without specifying any year and alleged that the nation’s wealth was plundered when the 220MW RPP in Bhikki and 136MW project in Sharaqpur remained non-functional for the entire contract period. The government kept paying $6.02 million a month rent for the two plants for three years — a total of Rs18.6 billion. “Action should have been taken against these plants,” he said. He argued that the government would have done better to follow the power policy of 1995 in which independent power producers (IPPs) were encouraged. The IPP policy was initiated by the PPP government at the time. The IPPs which were the real investors in the country, said Mr Hayat, offered lower tariff than the RPPs. He said there was no reason to follow the RPP policy devised during the previous government. He said the IPPs were using modern and world renowned brand names compared to RPPs employing obsolete plants. Chief Justice Iftikhar Mohammad Chaudhry asked Pepco’s counsel Khawaja Tariq Raheem to submit copies of the contracts and said he wondered why Nepra remained a silent spectator and penal clauses that usually were part of any agreement obligating companies to complete the projects in time or face cancellation of a contract or penalties had not been invoked. Mr Hayat, who is a member of the National Assembly, pointed out that the total generation capacity of 26 IPPs was 6,098MW (dependable 5,500MW) but the government had purchased about 3,068MW in 2009. “We would be paying $1.62 billion to eight RPPs over the next three to five years to get a meagre 1,156MW, meaning that one megawatt would cost $1.4 million,” he said. “The same amount (Rs140 billion) invested by the government itself would set up power houses of 10,700MW,” he claimed. He alleged that two top government functionaries were involved in the matter, but at the court’s insistence named only Raja Ali Zulqarnanain who is reported to be a relative of the prime minister. The chief justice asked Pepco’s counsel to come up with a solution to the RPPs issue after going through the apex court’s judgments on LNG, Pakistan Steel Mills, etc, and adjourned the proceedings till Oct 21.