Amid extensive power outages and a Turkish firm’s decision to move international courts over a power deal gone sour, Pakistan is working on a plan to renegotiate with the controversial rental power plants (RPPs).
The decision comes in the wake of countrywide power protests, some violent, which could seriously affect the ruling party’s popularity in election year.
Sources told The Express Tribune that the government is also seeking new tariff rates on electricity produced by RPPs.
“The government will seek permission from the Supreme Court to use the infrastructure of RPPs to generate 400 megawatts of power,” said a senior official in the water and power ministry, adding the new tariff rates would be introduced after approval from the apex court.
“The government will finalise tariffs and other terms and conditions of the contracts after the court agrees on renegotiating with RPPs,” he added.
The ministry’s secretary Zafar Mahmood and its spokesman could not, however, be reached for comment despite repeated attempts.
Earlier, the National Accountability Bureau (NAB) had also proposed a similar deal, but the Supreme Court rejected it. “We had proposed to the Supreme Court to renegotiate a deal with RPPs for better use of infrastructure,” confirmed NAB’s spokesperson Zafar Iqbal.
Former water and power secretary Imtiaz Qazi had informed a parliamentary panel on June 14 the government was trying to find a way to resolve the RPPs’ dispute and work out a way to make them functional.
Qazi said the government had managed to add 3,394 megawatts to the national grid since March 2008, when it was voted to power. Out of the 3,394MW, 400MW was produced by RPPs.
He added that RPPs had the capacity to generate another 400MW, but the plants were lying idle after the Supreme Court cancelled their contracts.
Meanwhile, Turkish-based power firm Karkey Karadeniz Elektrik Uretim (KKEU) has served a legal notice on the government of Pakistan.
Reacting to the Supreme Court’s decision, KKEU had earlier sought compensation over a loss the company said it suffered as a result of a breach in the agreement of the Rental Service Contract.
NAB had sought a payment of $180 million from KKEU, but the company refused to make the deposits saying Pakistan’s breach of contract pertaining to RPPs was in violation of international law. NAB had also obtained and issued a freezing order against Karkey’s banks accounts in Pakistan, vexing the company further.
“Following the Turkish firm’s response, Pakistani authorities are desperately trying to dissuade Turkey from going to international courts by renegotiating a deal with RPPs,” said another official.
Published in The Express Tribune, July 3rd, 2012.