The bench observed that the plant which should be producing 201 MW by now was only generating merely 55 MW to the national grid. – File Photo

ISLAMABAD: The Supreme Court on Thursday directed Reshma Rental Generation Company Limited to deposit remaining 14 per cent advance mobilization amount taken for installing rental power plant which stood around Rs4.5 billion with markup by Friday or face legal consequences.

A two-judge bench of Chief Justice Iftikhar Muhammad Chaudhry and Justice Khilji Arif Hussain issued directive on a suo motu case after it was informed that the Reshma Power Plant had returned Rs2.5 million with the NPGCL, a government's generation company.

An advance mobilization fund of $55.27 million was paid to the Reshma Plant on October 3, 2009 after securing a loan from the banks on 16 per cent markup but the project was yet to achieve the commercial operation date (COD).

The bench observed that the plant which should be producing 201 MW by now was only generating merely 55 MW to the national grid.

During proceedings, Federal Minister for Housing Makhdoom Faisal Saleh Hayat requested the Court to order the return of the advance mobilization amount in dollars as the RPPs received the amount in this currency.

He prayed the bench to pass an order rescinding licenses awarded to the RPPs and all those involved in the scam should be handed down exemplary punishment.

“My case is that complicity, collusion and connivance was committed at all level in the award of contract to the RPPs,” he alleged.

He conceded that the country was facing power shortage but the RPPs were not a suitable answer to the looming shortfall.

Faisal defended a cabinet's decision regarding RPPs and said the water and power ministry had deliberately misled the cabinet which still decided that projects which failed to achieve crucial milestones should be cancelled with heavy penalties.

“Whatever is being done today by Nepra and Gencos is all cover and they suddenly woken up out of slumber after the apex court's taking the suo motu,” he added. Comparing the tariff of the RPPs with that of the IPPs, he cited the example of 232 MW ship mounted Karkey Karadeniz Elek trik Uretin AS Turkey Korangi project, the said the plant was producing electricity at 4.5 to 6 cents when it should be less than what the IPPs were generating at 2 cents per unit.

The Pakistani nation had to give $564 million or Rs60 billion to the Karkey project in five years as rent to produce 231 MW and another $394 million or Rs35 billion in five years as rent to 201 MW by Reshma plant. “Thus we will pay Rs90 billion or $450 million in five years just to two plants but claims that we do not have enough money to clear the circular debt,” he added.

He said recently Pepco had floated Rs30 billion bonds in the market to clear the circular debt but had enough money to pay Rs90 billion to the two RPPs, and he was unable to understand what was the logic behind this.

He also lamented that the electricity produced by the Karkey plant would cost the government $2.2 million per MW that too through outdated machinery when brand new machinery was easily available from US, China, Europe etc; could produce per MW of electricity at $150,000 to $200,000.

He said the 425 MW combined cycle power plant at Nandipur ( Gujranwala ) for which China had offered brand new machinery that eventually would be our property would cost $750,000 per MW of electricity.

The Chief Justice questioned why the think tanks and concerned authorities did not care about such things.

Justice Khilji Arif Hussain observed that the government opened the letter of credit at 14 per cent mark up knowingly the current recession in US would increase our liability. Further hearing was adjourned till Monday.