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SCANDAL
BILAL IFTIKHAR ERP# 05854
PRESENTATION OUTLINE
What is RPP? What was the need of RPP in Pakistan? Brief history of the contracts &
procedure Corruption in RPP,,, Truth or Lie!!!!! Verdict by Supreme court Conclusion Q&A
INTRODUCTION TO RPP
RPPs are used to meet short term
energy requirements. They are mostly used as temporary energy source providers. They are typically commissioned on 4~6 moths basis based on available technology. Rental periods are normally installed for 5 ~ 7 years depending upon the country requirement.
INTRODUCTION TO RPP
The rental power business has been around for decades, but it has gained larger publicity in the midst and aftermath of the power shortages and transmission problems that plagued California in USA and other places, Asian and African Block including South West Asia (India and Pakistan) during 2002 onwards. Utilities scrambled for supplemental power to compensate for inadequate transmission capacity, inadequate power generation capacity, and during severe weather conditions.
INTRODUCTION TO RPP
Rental power plants have been set up in the US, UK, India, Bangladesh, Kuwait, Sri Lanka, Turkey, UAE, Saudi Arabia, Iraq and Palestine & now in Pakistan as well.
The concept was introduced in Pakistan in 2007 when two projects were awarded to GE and APR, both from the US for 150MW and 136MW each.
severe challenges the country is facing today. Electricity is essential part of our daily life and its shortage has severely affected the economy and overall living of ours. Pakistan is currently facing up to 18 hours of electricity outage a day, is expected to face more if not dealt with in time. Current Energy Annual Shortfall goes even up to 6,000 MW. Annual Increase in Energy Demand: 8-12%. Peak Demand: 13,000 18,000 MW.
ADVANTAGES OF RPP
Short Term solution for emergency requirement
accepted internationally. No long duration commitments as in the case of IPPs. Quick delivery of power due to short construction period. Services acquired without buying the equipment. High availability matching that of new IPPs. Supplemental power to compensate for inadequate transmission capacity. Installation in a much smaller area, thus could be installed at choice stations.
the GOP decided to overcome this with RPP & two agreements of 150 MW & 136 MW were made. Process for Award of GE Energy and Alstom Power Rentals: Two Rental Power Proposals received on 13.07.2006 from GE & Alstom. GE and APR proposals summarized below 150 MW GE Energy Rentals: 10% Advance Payment against Advance Bank Guarantee. Monthly Advance Payment of 1% for first 4 rental months. Balance 86% in 36 equal Monthly Rental Services Fee. Confirmed and irrevocable Drawdown Letter of Credit.
Advertisements in leading newspapers of the country. Registration and issuance of Request for Proposal (RFP) Pre-bid meeting(s) Bid Receipts Opening of Qualification and Technical Bids (Envelope-1) Evaluation of Qualification and Technical Bids. Final Notification of Responsive Bidders. Opening of Financial and Tariff Bids (Envelope-II) of responsive bidders. Approval of Evaluation Report by GoP. Notification of Qualified Bidders. Issuance of LoA. Subsequent to issuance of LoA the concerned GENCO finalizes
ONGOING PROJECTS
CORRUPTION IN RPPS
Favoritism in the awarding of contracts. 220 Mln scam was recorded by transparency
international in RPPs (Karkey). Karkey was allowed to leave Pakistan without the payment of money which it received as down payment. It came into operation 9 month late then the original date adding only 60MW out of 232 MW. Huge loss caused to national treasure by increasing down payment from 7% to 14 % . Extremely expensive then all other energy sources.
CORRUPTION IN RPPS
Duty on the import of these machines & equipment
was completely waived off. This caused huge loss to the national treasure. Double payment of down payment because of the site shift in Nodairo Welfare power international. This money was later on recovered. In 2006, WAPDA officials offered sponsors for production of energy illegally by breaking rules, & national treasure had to face loss due to this. No RPP met the production efficiency requirement, but their licenses were not cancelled. Changes were made in the LC in terms & conditions at the eleventh hour.
CORRUPTION IN RPP
For one plant machinery was bought once
but charged twice similarly no one went to audit the equipment imported at one of the RPP hence the equipment was declared faulty and new ones had to be bought again. ADB disapproved this projects stating that this will result in an increase of 3145% of electricity charges and will be burdensome to foreign exchange reserves but still these plants were imported.
VERDICT BY SC
Issue was taken to SC by Faisal Saleh Hayat
&Khawaja M Asif, then SC took suo motto action as fundamental right of people was being violated. Chief justice along with other justice heard the case & ordered the cancellation of contracts of RPPs because of the fraud in this matter. SC held Wapda, Genco & Pepco & finance ministry responsible for loss to national treasure because they increased down payment & ordered them to recover the down payment & loses with interest.
VERDICT BY SC
SC held the ministers & secretaries of the duration (2006~2008) which were
involved in corruption responsible & ordered to take action against them according to NAB Ordinance 1999. SC further ordered chairman NAB that all officers which took financial benefits , action shall be taken against them according to law & a report shall be submitted for the courts review twice a month.
presented above, it is evident that huge corruption has been found in RPP case. SC has given its verdict, now its the duty of GOP to punish these corrupt people. Now the GOP should look for cheaper & more practical substitutes for energy production & should find a long term alternative.
Q & A