Islamabad
The NAB spokesman has clarified a news item published in The News dated February 28, 2016 with the title “An Appraisal of NAB Reference against a Textile Mills” and stated that the reference against the Pesco officials/GTML etc had been filed with the Accountability Court Peshawar which was sub judice before the court of law.
Commenting on such matter is an effort to influence the proceedings of the court. However, the NAB would like to set the record straight and clarify the questions raised in the news item as follows:
Question 1: After going through the reference, it appears that the NAB is confusing the federal government’s policy of June 15, 2007 of purchasing surplus power available with textile industries from their captive power plants on mutually agreed rate applicable for whole Pakistan - while continuing to provide them any sanctioned/approved amount of electricity on Nepra approved rates from the concerned DISCOs grids.
It was clear that the furnace-oil based electricity being purchased from captive power plants to increase overall generation capacity of the system will be costlier than the subsidized electricity being provided to textile textile units concerned by the government.
Also electricity once purchased from captive power plants becomes ownership of purchaser (concerned DISCOs in this case) and they can sell it to any of their customers. Keeping this in view, where federal government’s captive power policy was abused?
Reply:
Record reveals that GTML never behaved like a surplus power unit. Its demand of electricity was 25 MWs round-the-clock throughout the year. At the time of agreement in 2007, GTML was producing 15–20 MW electricity from gas generator. Their installed capacity of RFO generators was 19MW; however, they were not utilizing it due to being very costly. They were bridging up demand-supply gap through the Pesco electricity. In case of gas load shedding, their demand-supply gap was 15-20 MW and in case of load shedding by PESCO, gap was of 5-10 MW.
GTML used the Power Purchase Agreement for utilizing this costly RFO-based electricity for their own use at the cost of national exchequer and pretended to sell 10 MW electricity to PESCO; however, it used all of this electricity by itself and also pocketed huge profit of Rs. 9/- per unit.
Question 2: Is NAB sure that Gadoon Textile Mills Limited (GTML) was selling electricity to Central Power Purchasing Agency (CPPA) through concerned DISCO on rates higher than agreed between CPPA and APTMA and were applicable across the country? GTML was not interested in selling electricity to PESCO and was only following a government policy
Reply:
Actually the ground reality is exactly the opposite of this claim. The whole file of the case attached with reference shows that GTML was dying for this agreement. Pesco was not willing to buy this electricity as its high level technical committee strongly recommended for not purchasing electricity from GTML. Hence, GTML used all tactics to force Pesco for signing of this agreement. Record revealed that Pesco never asked for even a single time to GTML for sale of its electricity, whereas GTMLsent a number of applications to PESCO, CPPA, Nepra etc for purchase of their electricity. Further, they also refused to fulfill the conditions recommended by the Technical Committee.
Question 3: GTML is largest textile unit of Pakistan with respect to its installed spindles and was top exporter of textile goods of Pakistan from KPK region in the years it sold its Captive Power.
GTML has shared all documentary evidences that it has capacity to produce electricity much more than its own needs. Other than discussions in meetings of BoDs of concerned DISCO, what evidence NAB has that GTML didn’t have surplus electricity when it applied to sell electricity in light with federal government’s policy? How can NAB take action into a matter which the regulator (NEPRA) has closed after proper proceedings
Reply:
It is wrong impression that Nepra has closed its proceedings. Rather it issued a show cause notice to Pesco for the illegalities committed in the instant agreement. PESCO submitted its reply but it was rejected by NEPRA and recommended to Ministry of Water & Power vide letter dated 16th November, 2012 to initiate investigations against delinquent officer of PEPCO / PESCO for fixation of responsibility.
Show cause notice was issued by Nepra to GTML on 1st March, 2012.
GTML submitted its reply but NEPRA rejected the same being unsatisfactory on 3rd April, 2012 and imposed fine of Rs1.0 million on GTML.
GTML requested for waiving off the fine on the ground that since case of PESCO is referred for investigation, it should be treated at par with Pesco. Nepra, while holding GTML responsible for the illegalities, waived off the fine.
Keeping above in view, it cannot be concluded that Nepra has closed this matter as the matter has been referred for investigation to Ministry of Water and Power.
Question 4: Also captive power plants were not regular electricity generation units and they were providing electricity on federal government’s demand as an interim arrangement to minimize the worst power supply-demand gap.
Initially, captive power plants were supposed to take permission from concerned provincial electric inspectors, which was acquired, but later it was highlighted that taking a generation license from Nepra is mandatory.
Nepra as regulator had taken up this issue as some 18 captive power plants hadn’t acquired generation licenses obviously for an interim arrangement, fined all those captive power plants and issued them generation licenses. Now question is when there is no loss to national exchequer just because of not issuance of generation license, how this issue which is purely a regulatory matter can be taken as criminal offence in a situation when concerned regulator has not only taken up the issue but has also closed it after proper proceeding? There is no loss of a single penny to the national exchequer in this agreement.
Reply:
Since the legal formalities were not fulfilled under the Nepra Act and Interim Power Procurement Rules, 2005 therefore the agreement is void ab initio and the whole payment of Rs3.19 billion to GTML is illegal. Further, the connectivity arrangements for purchasing electricity from GTML and supplying the same to GTML was against the Power Purchase Agreement and Technical Sanction issued by Pesco. This connectivity arrangement was done with the connivance of PESCO high ups (accused Qasim Ali Khan and Nawaz Ali Khan, ex-CEO and Director Technical PESCO respectively) despite several dissenting notes by the officers of PESCO. Hence GTML was not earning a marginal profit rather it was pocketing a huge difference of Rs9/- per unit. This huge margin was not available to any CPP of the country.
Question 5: No decision of any authority exist which shows that electricity was to be purchased on peak hours only.
Reply:
This is a wrong assertion. The documents attached with the reference show that the purchase of power from CPP was allowed on Take-and-Pay Basis and decision to purchase electricity at a particular time was left solely on the discretion of PESCO as per its load requirements.
Further, in case of GTML specific approval was obtained by Member (Power) Pepco by stating that this electricity will be purchased only during peak hours. However, this condition was also violated and round-the-clock electricity was purchased from GTML and the same was resold to it.
Ahmad Noorani adds: NAB was ready to give official version to The News questions but detailed version of NAB on every point was made part of the story. While issuing this press release, the NAB has shortened questions from The News.
The NAB is again confusing the basic fact that whatever was wrong was wrong with the government policy and all conditions and events that took place at implementation stage were same in all the cases of purchase of electricity from Captive Power Plants (CPPs) across the country.
The NAB has either to approach policy makers or to hold all sellers of captive power responsible instead of pinpointing specific people. Another detailed version of NAB has come and now it’s up to the readers to decide about facts. The News stands by its story.
