To hear Power Minister Awais Leghari, one would think that relief for the consumer was round the corner. with Independent Power Producers signing fresh Power Purchase Agreements one after another. He disclosed that five agreements had been terminated, and talks were going on with 16 others. However, Mr Leghari did not mention that termination had meant loss of trust in the Pakistan government’s sovereign guarantees among foreign investors. That had meant that bidders had held back in the bidding for PIA recently, with the result that one bidder made a bid which was a fraction of the reserve price. With the IMF also insisting on the privatization of the WAPDA distribution companies, loss of confidence in the government by large investors is going to have negative repercussions for that process. It will meant that not only will the government have to pay the bill for losses, it will also have to bear the wrath of the IMF, which it is not inclined to do. The loss of confidence among foreign investors might be balanced against relief to the consumer, especially when one looks at the voting power of the latter. But that relief has not so far been forthcoming. So what is the point of the whole exercise?
Mr Leghari’s recounting of the negotiations he is conducting should make any observer horrified. Apparently, the files show over invoicing on equipment used to set up the IPPs. Even on that inflated capital, the payback in profits and dividends had repaid the investment on many IPPs in two to four years. Another point of approach is the cost allowed on power projects elsewhere, which were much lower than the costs allowed here. The differential is so high that there is no question that kickbacks were not involved.
If there is no accountability, what is to prevent repetition? Though the renegotiation process is uncovering a can of worms,there is no sign that anyone is to face the music. IPPs may claim that they are negotiating new agreements and should be spared, but the argument of a closed and settled transaction, replaced by a fresh one, does not apply to Power Division officials of the time and their political masters. If they had done their job honestly, this situation could have been voided. The argument that the country needed power urgently should not be applied to corruption.
