The meeting was informed that the Central Power Purchasing Agency (CPPA) passed on the Rs 28.18 billion of capacity charges of IPPs to end consumers by not allowing the power plants to produce electricity. The panel was told if the government allowed IPPs to operate, it will not only massively bring down power load-shedding but help generate additional revenue. The committee decided to hold an exclusive meeting to discuss the matters pertaining to Rs 74 billion payments to IPPSs on December 6-7, 2017. The PAC directed the secretary Power Division and other senior officials of the Ministry of Energy to ensure their presence in the upcoming meeting.
The audit officials informed the panel that Central Power Purchasing Agency and IPPs have an agreement according to which if at any duration the agency is not purchasing the power, it will pay capacity charges to power plants. The audit officials informed the committee that Rs 28.18 billion payment on account of capacity charges were paid to IPPs when power load-shedding was at peak. The AGP audit report has 12 additional such audit paras on irregularities of CPPA wherein total capacity charges touch Rs 74 billion.
The panel also took the notice of substandard benzene import by the Hascol Petroleum Limited which is not only causing cancer but has also incurred Rs 250 million losses to the national kitty. The panel asked the Oil and Gas Regulatory Authority (OGRA) Chairperson Uzma Adil, who has allowed Hascol to import such chemicals in sheer violation of set rules and regulations, to explain it.
Briefing the panel, the OGRA chairperson tried to justify the import of benzene by the oil marketing company, on which the panel snubbed her, saying that the regulatory authorities were established to safeguard public interests, and not of oil companies. The PAC meeting reviewed and discussed the audit paras of Ministry Cabinet Secretariat and attached departments of year 2016-17. The audit officials said that it was the responsibility of National Electric Power and Regulatory Authority (NEPRA) to check the standards of the agreement between IPPs and CPPA, but the authority failed to fulfill the responsibilities.
Briefing the panel, NEPRA chairman said that capacity charges to the tune of billions of rupees paid to IPPs should be probed in detail as to how the operators kept their plants shut and made easy money. Member Committee Shafqat Mehmood said that in Pakistan, overall governance system is too week and as a result various players are freely looting the masses as there is no serious check and balance system, adding that they should improve the system otherwise such losses will continue.
The NEPRA officials said that the circular debt has, once again, crossed Rs 480 mark and if the serious reforms are not implemented and brought in power production, distribution and transmission system, this menace will never be eliminated. Member Committee Sheikh Rasheed said that huge corruption activities are taking place in producing and power distribution companies, adding these companies are making multibillion rupees by overbilling. He said those officials are immediately transferred who make correct electricity bills. He said that in past year in district Qasur of Punjab, Lahore Electricity Supply Company sent Rs 7 billion additional bills to power consumers.
The chairman NEPRA said that over the years furnace oil prices in global market are massively reduced but the benefit in furnace oil prices was not passed on to the end consumers. He said that the government is supplying power to consumers at Rs 65, 000 per ton price of furnace oil which internationally is costing Rs 35, 000. The NEPRA officials said that fuel adjustment surcharge benefit is also not being passed on to the poor consumers as this was passed on to the consumers using over 300 power units per month.
The chairman NEPRA further said that at present total line losses are 18 percent of which 16 percent are passed on the consumers while rest of 2% are added in the circular debt. The chairman committee said that rest of the 2% line losses are also recovered from masses, adding that at present line losses have reached Rs 200 billion which will be paid by the masses not by anyone else.
The chairman NEPRA said that in past 4 years the benefit of the reduction in electricity prices was not given to the rural masses, adding that until power theft issue is resolved, there is no solution to the circular debt this will emerge time and again. He said that on account of electricity theft, power feeders in Khyber Pkhtunkhwa (KPK) are on the top. The audit officials informed the panel that oil marketing company Hascol imported benzene chemical to mix it in petroleum products which is banned across the world because it causes cancer. They said that the OGRA let the company free after imposing Rs 1 million fine while actual fine should have been imposed on the company of Rs 250 million. They said that the OGRA is trying to defend the OMC against the interests of the masses.
Copyright Business Recorder, 2017