Rs480b paid to IPPs unjustified, panel recommends recovering Rs 35b from IPPs

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As the investigation into the Rs480-billion circular debt payments continues, the special panel backed federal auditors’ recommendations to recover Rs35 billion from Independent Power Producers (IPPs) that were paid to them on flimsy grounds.

The committee noted that the government had paid the huge amount to the IPPs bypassing the Auditor General of Pakistan (AGP). Similarly, it had also paid Rs10 billion as the markup on the due amount.

A sub-committee of the Senate Standing Committee on Finance under the chair of Senator Mohsin Aziz discussed the payment of Rs480 billion made to the IPPs in 2013 when the ruling government took charge. The Senate Standing Committee on Finance had constituted its sub-committee to thoroughly investigate the issue of paying huge unjustified amounts to IPPs.

The committee members met on  Thursday to establish that the government had violated the rules and regulations for making payment to the IPPs. Committee member Senator Kamil Ali Agha questioned why the government paid interest rate suddenly, which had not been paid for last several years.

Another committee member Saud Majeed said that they had reservations about the way the debt had been cleared. He noted that the government had made an additional payment of Rs32 billion to the IPPs without any proof of electricity purchase from them. He appreciated the role of the AGP in this case. Officials of the Federal Board of Revenue (FBR) informed the committee that AGP report had identified Rs20 billion general sales tax (GST) to be paid by the IPPs. The sub-committee members have asked the FBR officials to follow the case in the next meeting.

Meanwhile, the Senate Standing Committee on Finance and Revenue’s meeting held under the chair of Senator Saleem Mandviwalla has directed the FBR chairman to ensure his presence during the committee meetings. The committee further considered “The Public Private Partnership Authority Bill, 2016,” passed by the National Assembly. The bill provides a regulatory and enabling environment for private participation in the provision of public infrastructure and related services through fair and transparent procurement.

The committee proposed some amendments to the bill but the matter has been deferred with directions to the Ministry of Finance to respond on the issue of amendments proposed by the committee. The committee will produce a report after the hearing in the subsequent meeting.

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