Over $100 million paid to Karkey as penalty, claims Sherry
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Business Recorder | 27 September 2019

Over $100 million paid to Karkey as penalty, claims Sherry

by ABDUL RASHEED AZAD

Pakistan has paid over $100 million to Turkish rental power company Karkey as a penalty out of $800 million, Senator Sherry Rehman has said. She said this while chairing a subcommittee of the Public Accounts Committee (PAC) here on Thursday which held to review and discuss the audit paras of the Ministry of Water Resources of year 2015-16.

The Turkish company that constructs and operates rental power plants (RPPs) had been awarded the amount in a damages suit it had brought against Pakistan at International Centre for Settlement of Investment Disputes (ICSID) over the execution of an $800 million award to Karkey Karadeniz Elektrik Uretim (Karkey).

The audit officials informed the panel that during 2014-15, the total budget of the Ministry of Water Resources was Rs 43 billion but later the ministry also received Rs 24 billion supplementary grant. The chairperson committee said that over half of the budget the ministry got in the shape of supplementary grant. Federal Secretary Water Resources Mohammad Ashraf said that the amount managed through supplementary grants from the Ministry of Finance was spent on expenses on the case against Karkey.

Ashraf revealed that Rs 24 billion supplementary grant was taken for the expenses of the case at International Centre for Settlement of Investment Disputes (ICSID). He said that following the Supreme Court of Pakistan’s decision against the Turkish rental power company not only the firm went to the ICSID against Pakistan but Turk authorities also expressed dismay over the violation of the agreement with Karkey.

The Auditor General of Pakistan (AGP) requested the panel to settle the para but the chairperson committee said that the amount was received without the approval of the Parliament thus it is not possible for the panel to settle the para. Sherry added that as a result of former Chief Justice Iftikhar Mohammad Chaudhary’s decision based on ego, the nation is forced to pay Rs 600 billion as a penalty.

While lashing out at former chief justice Chaudhary, she maintained who will make former chief justice answerable for such huge financial losses to the national kitty, which Pakistanis are forced to pay. She said that the panel will not give approval of Rs 43 billion supplementary grant. She said that Pakistanis are forced to pay a price for judicial activism of the former chief justice.

The panel was further informed by the secretary water resources that the outstanding dues against Central Power Purchasing Agency (CPPA) have amounted to Rs 185 billion from Rs 50 billion in 1996. According to details, during the privatization of Kot Addu Power Company Limited (KAPCO) in 1996, a loan note agreement was signed between WAPDA and KAPCO, which after the rebuilding of WAPDA was amended on April 20, 2002. Accordingly half yearly installments of KAPCO pro-note to be adjusted against non-escalable component of the capacity purchase price of KAPCO for onward submission to the WAPDA. An amount of Rs 50.038 billion deducted by the CCPA from the invoices of the KAPCO was not remitted to WAPDA in violation of rules which now has amounted to Rs 185 billion.

When the chairperson committee sought explanation from the Ministry of Energy (Power Division), the officials informed that the principal accounting officer (PAO) of Power Division was not able to attend the meeting. The panel expressed serious anger over the absence of the secretary Power Division.