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Posts Tagged Electric Power Scams

Mother of all scams

2014-10-05

18:11:50

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Mother of all scams

 
The Sharif brothers and their closest confidante Khawaja Mohd Asif are all set to squander away an astronomical sum of 3 Billion Us Dollars.which will put to shame all scammers in the past such as Mr 10 Percent and his cronies…All other scandals such as Swiss accounts OGRA Hajj Ephedrine scams will be dwarfed if the script is executed.
 
The series of China visits by Sharif Brothers and their children, Khawaja Asif and a Lahore based tycoon ,are nothing but part of the grand design of the mega of the mega scams…
 
The Sharif brothers have struck deal with Some Chinese coal power companies to inflate the officially notified tariff and capital cost of power projects by a whopping 3 Billion dollars to accommodate their kick backs. The 6600 MW Gaddani coal power park and planned 6600 MW coal power projects are the crux of the deal combining into a total of 13200 MW. The main architect of the scam is Khawaja Mohd Asif who interestingly had challenged the rental power plants in Supreme court and a favorite of former CJP Mr Iftikhar Chaudhry.
 
He is actively assisted in this wheeling dealing by Salman Shehbaz younger son of Punjab CM and active participant in bilateral govt dialogues between Govt of Pakistan and China despite the fact that he does not hold any public office.
 
Sharif brothers who have a penchant for flouting rules or bending them to pave way for their grandiose corruption have established a nexus with Acting Secretary Water and Power Mr Saifulla Chattha ,Ms Nargis Sethi CEO of Gaddani Power Park on one hand and looking after all important Economic Affairs Division. This division is responsible for approval of all financing agreements with Chinese companies and export credit agencies such as EXIM Bank, China Development Bank etc .
 
 Mr Fawad Hasan Addl Secretary is lead person on behalf of PM Sectt
for whiplashing non compliant officials. The final actor in the script is Kh Mohd Naeem present acting 
 
Chairman NEPRA and a brother in law of Khawaja Mohd Asif and father of PML N woman MNA Shaza Fatima.
 
THE PLAN
The plan of this scam has NEPRA as the main instrument. Since it is power sector regulator therefore it has its mandate to determine power tariff, key benchmarks such as capital cost of power projects, plant efficiency, issuance of tariff and other critical standards which have key influence on level of consumer prices and consequently corrupt practices. The equation of corruption has two critical variables namely Capital cost and consequently Tariff. Higher the capital cost the more the consumer has to pay over the term of agreement.(as simple as that…these Sharif Brothers and Khawaja will claim that it is still cheaper than Oil based costs BUT the fact remains that it is much more expensive than it should be)
 
The key to Sharif brothers plan is in capital cost of coal power projects. And the citizens of Pakistan will bear the brunt of this corruption in coming years.
 
The road to achieve this has been paved by Khawaja Mohd Asif who has moved a summary to NEPRA through his secretary Water and Power to reopen the upfront TARIFF already determined by NEPRA in JUNE 2013after a very lengthy process of consultation with stake holders and public hearings and formally notified in Sept 2013.Any one including Ministry of Water and Power could have represented against determination of NEPRA within fifteen days, which have long expired. The Secretary has asked NEPRA to condone the 15 day period by relaxing Section 31 of NEPRA Act. NEPRA instead of out rightly rejecting this illegal demand has fixed the case for public hearing.
 
The already notified NEPRA tariff and capital cost are very generous and already 25% above the internationally available data on capital cost. This NEPRA claims was done to attract investors for a period of 6 years ending 2019.In fact foul play was also done in Sept 2013 when capital costs for a 600 MW coal power plant were increased from 585 million dollars to 1.25 billion US Dollars. The tariffs notified in Sept 2013 for plants based on imported coal were……..cents per unit.
 
Now in collusion with Chinese companies the Sharif brothers cleverly playing Energy and China cards are clamoring to get these costs heavily increased and rules set aside to skim off 3 billion dollars over and above NEPRA determined price and 6 billion dollars over and above international bench marks.
 
The Ministry of Water and Power are hell bent to accomplish following goals
 
• To increase the capital cost by another 29% from 1.25 Million Dollars per Mega Watt to 1.5 to 1.7 Million Dollars per Mega Watt for 600 and 200 MW plants respectively.
 
• To increase tariff from the notified tariff by 41% to 65 paisa per unit for 600 MW plant and 40 % to 60 paisa per unit.
 
• To reduce plant efficiency factor for 600 and 1000 MW plants from approved 42% to 39 %
 
• To change PPRA rules to exempt Chinese companies from Procurement procedures and competition
 
• To Delete two (660×2) coal power projects At Gaddani from the Govt execution list and also hand them to private sector on the pretext of shortage of govt funds. In reality the reason is that if these projects are implemented by govt then it will have to follow PPRA Rules and announce competitive bidding which will expose real costs of these projects.
 
INTERNATIONAL EXAMPLES of COSTS
 
In January 2014, South Korea’s state utility KOSEP executed an agreement with an Indian company Jinbhuvish Power Generation to set up a 600 MW coal power plant in Yavatmal,Maharashtra a cost of 585 Million US Dollars translating into 0.91 Million US Dollars per MW .
 
• Similarly The Indian Government owned NTPC is setting up indigenous coal based (more expensive compared to imported coal due to mining costs) ……2640 MW plant in Bundelkhand Madhya Pardesh consisting of 4 Units ( 660 x4) at a cost of 2.9 billion US Dollars translating into 1.09 Million dollars per MW. It is well in knowledge of Mr Shehbaz Sharif but they are notorious for inflating project costs to skim off money. Examples are Metro project in Lahore and now in Rawalpindi at grossly inflated prices.
 
THE MATH of Corruption
 
Taking into account the planed implementation of a total of 13200 MW coal based power projects for which MOUs have already been executed ,the total amount of money to be looted is 13200x 0.25 million US Dollars translates to a very conservative 3.3 Billion US Dollars. In reality Chinese companies stand to make another extra 3 BILLION DOLARS.
 
The scheme so cleverly designed will enable the Chinese companies to set up the plants for free without putting a dollar of their own. The method is simple: Given the 75:25 ratio of Debt and Equity for these projects, the Chinese companies will put in 25 percent equity( already over priced by 25% over and above world prices) and 75% bank loans sovereign guaranteed by Govt of Pakistan. The interest cost will be recovered from consumers. So 25 % being the kick back, the Chinese companies will be setting up the plant for free. Whereas Sharifs and Khawaja will be skimming the remaining 3+ Billion dollars
 
THE WAY FORWARD
 
To save the nation from this mother of all corruption it is imperative to launch a nationwide campaign through media, patriotic legislators politicians, professionals and also Supreme Court to demand an independent estimation of actual costs..otherwise Sharif Brothers and Khawaja Asif will again plunder national wealth .

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