Thursday, July 11, 2013
ISLAMABAD: Former Managing Director of Pepco Munawar Baseer has exposed the Rs15 billion scam of the Nandipur Power Project
In a letter sent to the chief justice of Pakistan he states that the PML-N government has revived the 425 MW project with a monumental increase in the cost revised upwards to $570million from $329 million.
“The revised PC-1 of the Nandipur power project is a well thought out, well conceived and white collar scam to cheat the public exchequer of $149 million, the benefit of which will go to a select private sector party,” the former Pepco executive claims.
The reality is that all equipment, machinery is at the site or the port and paid for. The only increase demanded by the Dongfong Electric Corporation (DEC) is $40 million. And there could be an increase in extended insurance for 2-3 years, plus IDC. This could add up to say another $25 million at the most, bringing the cost to $425 million plus $25m which equals $450 million, certainly not $574 million. This means that the hefty amount of $124 million is still unjustified and unaccounted for.
Baseer pleaded in the letter praying that the Honorable Supreme Court might take notice of this new scam of defrauding the people of Pakistan by a well-conceived, white collar scam.When contacted Baseer said that no doubt the project has been delayed because of the then Law Ministry in the PPP government, but the machinery lying at the port is actually outdoor machinery and there is no question of its rusting which may need compensation.
They just need to install the machinery at the site and make the project operational. However, the contractor would have to remobilise its manpower and machinery at the site for which the Chinese company has demanded $40 million. To a question he said that if needed he would submit the petition with the SC seeking the probe into the monumental raise in the cost of the Nandipur project.
However, in the letter he submitted: “As a citizen of Pakistan I am extremely pained to see that corruption in the energy sector continues unabated. Most recently, the now famous case of the 425 MW Nandipur Power Project delays, in which suo moto action has also been taken by the Honorable Supreme Court, is again being used by the mafia to make windfall gains.”
It appears that the Pepco and Ministry of Water and Power, using this pretext, has now conjured up a new scam by submitting a new PC-1 for a monumental increase in the cost of the Nandipur project. Using the cover of the current back-breaking load shedding and the need to expedite the stalled projects of Nandipur and Chicho ki Malian, on order of the Honorable Supreme Court, the MW&P has come up with a new plan to rob the public. “It appears that the mafia has now formulated a unique plan under a white collar arrangement, which may even have gone unnoticed. However, I as the former MD of Pepco who revived this dead project after my takeover as MD Pepco, feel it is my moral, professional and national responsibility to bring the facts to light.
“The Nandipur project has certainly been the lowest cost power project, as under my management, neither commission could be asked for, nor commission could be offered or solicited by any party. The Chinese were amazed at this new favourable position and agreed to undertake the project after the requisite discounts. Full financing arrangements of $329 million were also made under a Co-Face (French) and SinoSure (Chinese) package with BNP-Paribas as the lead Syndicate Bank.
However it has always been the attempt of the mafia, including the private sector IPP sponsors, to stall any project which would demonstrate the real cost of power plants, exposing the inflated costs which have been used by all IPPs as an instrument to make upfront money which is generally transferred overseas. In the sequence of events along with the original cost of the Nandipur power project of $329 million, it can be clearly seen that even allowing for maximum escalation there is still an unprecedented increase of $124 million, which is unaccounted for.
Narrating the summary of Nandipur power project scam in the petition, Mr Baseer told that
i) Provisional Letter of Intent (LOI) issued by MD Pepco and accepted by DEC on 3 December,2007. Discounted EPC cost agreed with DEC was $329 million.
ii) Total Project Cost estimated at $385 million to include Insurance, Interest During Construction (IDC), and miscellaneous civil works (costing sheet attached, Annexure B).
iii) Project levelised Tariff for 25 years was 10.821 cts /kwh vs. equivalent IPPs (Atlas, Nishat Power, Nishat Chunian etc.) at about 12.125 cts /kwh. Net Tariff lower by 1.304 cts /kwh at FO cost of Rs25,597/ton in December 2007.
iv) Nandipur 425 MW Power Project is the lowest cost project as even compared to IPPs set-up in 1995 – 1998 under PPP government. (news report attached, Annexure C)
v) Full contract was signed in January 2008 by Mr Munawar B Ahmad, MD Pepco & Mr Loa Zhigung President DEC, for agreed EPC cost of $329 million.
vi) Financing arranged by Pepco through Co-FACE (French credit), Sino Sure (Chinese), and BOP (Rupees) under overall Syndicate headed by BNP Paribas (French Bank).
vii) DEC mobilization and construction started in October 2008. GE Turbines delivered and installed at site and paid for under financing arrangements.
viii) HRSG; Heat Recovery Steam Generator Steam Turbine, Balance of plant equipment shipped by DEC in seven (7) batches and paid for, and now still lying uncleared at KPT/PQA port since August 2010.
ix) The Chinese Contractor, DEC on August 20 wrote to Yusuf Raza Gilani (letter attached, Annexure D) requesting the GOP’s assistance in issuance of Ministry of Law legal opinion and release of shipment and balance payments.
x) There was apparently no response from PM’s Secretariat or Ministry of Law. Even the Chinese Ambassador wrote to the Prime Minister, Pepco etc, but no affirmative action was taken.
xi) Finally in September 2012, DEC was forced to de-mobilize its crew of about 400 construction and engineering workers and issued letter of contract cancellation.
xii) For past 2 years and 10 months, a simple matter of issuance of a legal opinion by Ministry of Law, re-affirming that the GOP Sovereign Guarantee for the overseas loans (Co-Face and Sino Sure) was valid has not been issued.
xiii) The PPP government clearly and intentionally delayed the matter and issuance of the Ministry of Law letters for want of commission by the concerned. Even when the then Minister of Water & Power, Raja Pervaiz Ashraf was approached on the matter he maintained that there was nothing he could do on the matter.
xiv) The position now is that nearly 100% of plant, machinery and equipment has been shipped and paid for under the financing arrangements, and is either at the Nandipur site or the KPT/PQA ports.
xv) About 50% work at site, including installation of three brand new GE Frame nine (9) turbines has been completed. Balance work, after delivery of equipment from port and re-mobilisation of the Chinese Contractor, DEC, can be completed within one (1) year.
xvi) DEC has only demanded an extra $40 million for re-mobilisation, and increase in construction costs. This would result in the project cost escalating to $425 million or thereof. (news report attached, Annexure F).
xvii) However a new mafia is at work now, and many reports, project escalation estimates have been spread in the media, stating that the project has escalated to an astounding $574 million (news reports attached, Annexure G).
xviii) The question is where did this extra cost of about $149 million come from? There are also reports of plans by PML-N to privatise the Nandipur Power Plant and let the “Chosen” party arrange for the “extra costs”. Since a new revised cost has been “approved” by the ECC.
xix) The revised PC-1 by Pepco/Ministry of Water & Power for Rs57 billion ($570 million) is under a well thought out scam to cheat the public exchequer of $149 million, the benefit of which will go to a “select private sector party”
xx) The reality is that all equipment, machinery etc is at site or at the port and is paid for. The only increase demanded by DEC is $40 million. Plus there could be an increase in extended insurance for 2-3 years, plus IDC. This could add up to say another $25 million at the most, bringing the cost to $425 m + $25m = $450 million, certainly not $574 million.
xxi) The Honorable Supreme Court may take notice of this new scam of defrauding the People of Pakistan by a hefty $124 million under a well conceived, white collar scam, which has indications of being the “Mother of all Scams”.
ISLAMABAD: The National Accountability Bureau (NAB) desperately awaits the long-overdue judgment in the Rs3.48 billion ‘willful loan default case’ against Nawaz Sharif and his family members concerning the Hudabiya Paper Mills Private Limited.
The case hearing was concluded on December 3, 2012 by a two-member Rawalpindi bench of the Lahore High Court, declaring that the verdict was being reserved to be announced ‘soon’.
The division bench comprising Justice Khwaja Imtiaz Ahmed and Justice Farrukh Irfan Khan had heard for six months three identical petitions filed by Nawaz Sharif, Shahbaz Sharif and several other family members, seeking cancellation of the corruption cases which were filed against them by the NAB. The cases pertaining to the Hudabiya Mills, Ittefaq Foundries and the Raiwind assets were prepared in 2000 when the Sharifs were detained in the Attock Fort following the overthrow of their government by Musharraf. As the Sharifs eventually proceeded to Saudi Arabia in December 2000 after signing a pardon deal with General Pervez Musharraf, these references were adjourned sine die on April 4, 2001.
The NAB once again took up the pending cases in 2007 as Nawaz Sharif returned home. On August 8, 2007, the NAB filed an application with the Lahore High Court for revival of the pending corruption cases against the Sharifs. But the NAB application was finally thrown out by the Rawalpindi bench of the Lahore High Court in August 2008, maintaining that the cases were not routed through the NAB chairman. Yet another NAB attempt was halted by the court on the same grounds in February 2010. However, on a petition filed by the Sharifs, a division bench of the LHC headed by Justice Mansoor Ali Shah ordered the NAB on October 5, 2011 to return the confiscated assets of the Sharif family, including shares worth Rs100 million, prize bonds worth Rs115 million, documents of properties in Murree, Chaudhry Sugar Mills, Hudabiya Engineering Services, Hamza Shipping Corporation, Ramzan Sugar Mills, etc.
On October 19, 2011, the Rawalpindi bench of the High Court comprising Justice Ijazul Ahsan and Justice Abdul Waheed Khan passed a stay order in favour of the Sharifs and directed an accountability court to stay further proceedings on corruption references. On September 15, 2012, the Rawalpindi bench of the Lahore High Court restrained an accountability court from pursuing the corruption case against the Sharifs till the matter was adjudicated by it. During subsequent hearing of the case on October 9, 2012, the division bench of the LHC, comprising Justice Khwaja Imtiaz Ahmed and Justice Sardar Tariq Masood, advised the counsel for the Sharifs to ask his clients to pay back the decades-old bank loans to get rid of one of the three corruption references.
Justice Khwaja Imtiaz Ahmed told Salman Butt, the counsel for Mian Nawaz Sharif and Shahbaz Sharif, “The Sharif family seems to have recovered its losses and it is believed that the family is now well-off and can easily return all the loans to the banks. The loans procured from different banks were the public money and it should be returned at the earliest.” On December 3, 2012, Justice Khwaja Imtiaz Ahmed and Justice Farrukh Irfan Khan of the Lahore High Court’s Rawalpindi bench reserved its judgment on the Rs3.48 billion ‘willful loan default case’ against the Sharifs concerning the Hudabiya Paper Mills after the NAB prosecutor Chaudhry Riaz Ahmed completed his arguments in the case.
In his arguments, Chaudhry Riaz Ahmed informed the court that there was sufficient material available with the NAB to proceed against the Sharif brothers in the Hudabiya Mills case, especially a hand-statement of Senator Ishaq Dar as the approver wherein he has charged sheeted the Sharifs. Quoting Dar’s statement, Ch Riaz Ahmed said several bogus bank accounts were opened on the instructions of Nawaz Sharif and his brother Shahbaz Sharif, depositing the laundered money and later transferring the money into personal accounts.
In the “State vs Hudabiya Paper Mills Private Limited case”, nine members of the Sharif family were accused of committing money laundering to the tune of Rs642.743 million. As per the NAB reference, the Sharif family allegedly deposited ill-gotten money in fake accounts which were opened in the names of other persons and the money from these accounts was used to pay off the bank loans of the defaulting Sharif companies. Mian Muhammad Sharif, Nawaz Sharif, Shahbaz Sharif, Abbas Sharif, H
ussain Nawaz Sharif, Hamza Shahbaz Sharif, Mrs Shamim Sharif (Nawaz’s mother), Mrs Sabiha Abbas, Mrs Maryam Safdar and the former finance minister of the Sharif cabinet, Ishaq Dar are the main accused in the Hudabiya reference.
While concluding his arguments in the Hudabiya Mills case before a division bench of the LHC on December 3, 2012, the NAB prosecutor Chaudhry Riaz Ahmed narrated in detail the 43-page handwritten statement by Senator Ishaq Dar wherein he had accused the Sharifs of involvement in money laundering. As per the statement, which had been recorded before a District Magistrate, Lahore, on April 25, 2000, Dar accused the Sharif brothers of having used the Hudabiya Paper Mills as cover for money laundering during the late 1990s. Dar’s statement was recorded before a district magistrate in Lahore, after he was brought to the court from a jail by Basharat Shahzad, then serving as assistant director in the Federal Investigation Agency (FIA).
According to a senior NAB official, Ishaq Dar’s deposition was an irrevocable statement because it had been recorded under Section 164 of the Criminal Procedure Code (CrPC). Dar happens to be a high-profile PML-N leader who has always been considered close to the Sharif brothers. In fact, Dar’s son, Ali Dar, is married to Nawaz Sharif’s younger daughter, Asma Nawaz. Ishaq Dar confessed in his statement: “I opened two foreign currency accounts in the name of Sikandra Masood Qazi and Talat Masood Qazi with foreign currency funds provided by the Sharif family in the Bank of America by signing as Sikandara Masood Qazi and Talat Masood Qazi. All instructions to the bank in the name of these two persons were signed by me under the orders of original depositors, namely Mian Nawaz Sharif and Mian Shahbaz Sharif. The foreign currency accounts of Nuzhat Gohar and Kashif Masood Qazi were opened in Bank of America by Naeem Mehmood under my instructions (based on the directives of the Sharifs) by signing the same as Nuzhat Gohar and Kashif Masood Qazi.”
As per Dar’s statement recorded before District Magistrate Lahore on April 25, 2000, besides these foreign currency accounts, a previously opened foreign currency account of Saeed Ahmed, a former director of the First Hajvari Modaraba Company and a close aide of Dar, and of Mussa Ghani, the nephew of Dar’s wife, were also used to deposit huge foreign currency funds provided by the Sharif family to offer them as collateral to obtain different direct and indirect credit lines. Dar conceded that the Bank of America, Citibank, Atlas Investment Bank, Al Barka Bank and Al Towfeek Investment Bank were used under the directives of the Sharif family.
Interestingly, Dar also implicated himself by confessing before the magistrate that he — along with his friends Kamal Qureshi and Naeem Mehmood — had opened fake foreign currency accounts in different international banks. Dar said an amount of $3.725 million was transferred in the Emirates Bank, $8.539 million transferred in the Al Faysal Bank and $2.622 million were transferred in the accounts of the Hudabiya Paper Mills Ltd. He had concluded his statement by adding that the entire amount deposited in these banks finally landed in the account of the Hudabiya Paper Mills.
However, Senator Ishaq Dar neither denied nor confirmed having given the statement. Approached by The News on April 30, 2011 after Rehman Malik had announced taking up the Hudabiya Mills money laundering case against the Sharif brothers, Ishaq Dar stated: “This is all rubbish. The Hudabiya Mills case is nothing but trash. The matter is sub judice in the Lahore High Court and the facts would be known to the general public in due course. All transactions were duly reported to the State Bank of Pakistan as per the law of the land”.
As the NAB sent details of the Hudabiya Paper Mills case to the Election Commission of Pakistan last week, the PML-N said the NAB’s action was based on mala fide intentions. “The NAB should not do politics and it should refrain from becoming a party”, a PML-N spokesman said. On his part, Shahbaz Sharif addressed a press conference in Lahore with Ishaq Dar sitting next to him, refuting that they defaulted on Rs3.48 billion bank loans. “We never abused political positions to obtain loans and then to default on them. It is a conspiracy by a gang of four to malign the most popular leader in the country while misusing the NAB”.
On the other hand, a NAB spokesman has refuted Shahbaz Sharif’s allegations, saying it was in fact the Election Commission which had sought from the Bureau a complete list of the politicians involved in willful default and plea bargain cases. “The NAB records show the Sharif brothers had petitioned the Lahore High Court, seeking the quashing of the loan default cases pending against them in the accountability courts. And since their petition has not yet been decided by the LHC despite concluding the case hearing and reserving the verdict almost four months ago, the status of the Sharifs remains the same — accused in default cases”.
NAWAZ GOVERNMENT FIRST MEGA CORRUPTION SCANDAL IN NANDIPUR PROJECT
Nawaz Government First MEGA Corruption Scandal in NandiPur Project
DailyMotion
Tune
YouTube
