Findings on IPP payments details.docx

7/23/2019 Findings on IPP payments details.docx

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Details of Objections in Payment of Circular Debt of Rs 480 Billion

Finding regarding setting-aside amount of liquidated damages

Non-adjustment of liquidated damages of Rs 22.916 billion against

payment of circular debt.

(As per section 9. of t!e ""A# amount of $iquidated %amages ($%s&

'as payable by ""s '!ic! 'ere set aside upon settlement of )ircular

%ebt in *iolation of procedure in *ogue. +!ereas t!e same amount

'as required to be reco*ered , adjusted instead of setting aside&

Finding regarding ayments of !PPs

a& ssues regarding rregular,cess,A*oidable "aymentsrregularities in )apacity "ayments.

•

/njustified capacity payment for idle )apacity Rs 02.1 billionNTDC made the capacity payment for idle capacity without

purchasing electricity, despite having declared available capacity by

the IPPs.

• /njustified capacity payment for forced outages because of fuel

s!ortages Rs 2.11 billion.

Non supply of energy upon forced outages was attributed to fuel

shortages, whereas according to the section 5.! "a#$"b# of the

contract agreement , provision of fuel was the responsibility of IPPs.

%ence, capacity payment upon forced outages due to fuel shortages

was un&ustified. ("ara-

0.0.2&

• rregular capacity payment on account of non-pro*ision of data of

3etering )ommittee Rs #604.452 million.

!rregularities in "nergy Payments

• %iscrepancies in 3eter Reading ystem for nergy "ayments Rs

16.006 billion'nergy payment invoices were not supported by proper reports of

(eter )eading Committee upon which N'* was determined.

("ara- 0..1&

• /ndue fa*or on account of etra nergy "ayment due to implausible

determination of Net lectrical 7utput (N7& Rs 0.122 millionThe N'* was determined upon reading of the (ain (etering +ystem

which gave more units than that of ac-up (etering +ystem that

entailed etra 'nergy Payment.

("ara- 0..2&

!mrudent Financial #anagement



rregular payment on account of reimbursement of 'it!!olding ta

on %i*idend Rs 26.6 million.

)e/imbursement of withholding ta on dividend was irregular

because it was personal income of shareholders rather than Pass

Through item. ("ara-0..2&

Reco*erable amount of Rs 14.911 million due to application of 'rongec!ange rate

• tra payment made due to non-ad!erence to ))8s decision

regarding indeation of tariff Rs 5.94 million

Contrary to the 'CC0s decision, the management applied indeation

of tariff on the basis of closing rate instead of minimum of selling

rate of eight "1# specified ban-s.

• tra payment made due to application of !ig!er nflation and

c!ange Rate actor Rs 0.02 million.

• /n- aut!ori:ed,ecess payment on account of 1; surc!arge Rs

.969 million.'cess payment on account of 52 surcharge was made to 3ttoc-

4en td for the whole year0s ta liability instead of three and

half"67# months in violation of amendment made

on 5.86.98 in the Income Ta *rdinance, 988.

$oss due to production of electricity on Residual uel 7il (R7&

instead of <as = Rs 6.20>illion

!rregularities of $ulemental C%arges &Pass t%roug% !tems

/naut!ori:ed,bogus payment on account of +or?ers "rofit

"articipation und(+""& Amounting to Rs 14.09 million.Payments were made to employees and unauthori:ed persons as

against provisions of the Power Purchase 3greement "PP3#.

• /njustified payment on account of +or?ers8 "rofit "articipation und

9+""& Rs 6.6 3illion.

The amount deposited by the IPP ";au&i <abirwala Power Company

imited# on account of =PP; in the 4overnment treasury was less

than the amount claimed for reimbursement.

• /njustified payment on account of <eneral ales @a (<@& Rs

1.00 billion

The amount of 4+T, being a pass/through Item, was reimbursed to

the IPPs to the different IPPs without having evidence including paidchallan of 4+T against the provision of PP3.

• /njustified payment on account of 7pen )ycle )ost (7))& c!arges =

Rs 260.960 millionThe said payment was not covered under the Power Purchase

3greement "PP3#.

!mlausible&Defecti'e Clauses of (greements



• /n-necessary pro*ision of upplemental )!arges in t!e contract

entailing payment of Rs .05 billion.

The invoices of Capacity Purchase Price "CPP#, 'nergy Purchase Price

"'PP# $ ate Payment Charges "Interest# cover all the

epenses>compensation of the IPPs> hence, in addition to it, un/

necessary inclusion of clauses of +upplemental Charges in the PP3 isa sort of undue favor to the IPP0s.

Finding regarding ayments to )"*COs&Oil + )as $uliers

a, !rregularities in Payments

• 7*erpayment to N"<)$ amounting to Rs 2.2 billion

*ver payment due to direct payment of fuel purchase instead of

payment of ;uel Cost Component ";CC#.

• cess payment made to "7 on t!e purc!ase of furnace oil at

!ig!er rate against s!ort supply- Rs .266 million

3n amount of )s 5.9?? million was ecess paid for purchase of

costlier );* due to short supply of cheaper );* by P+*.

b,Ot%er irregularities&lases

Non-eistence,Non-rene'al of <as "urc!ase and ale Agreements

'it! t!e <as upply )ompanies Rs 25.59 billion.

<as sale and purc!ase agreements 'ere not signed 'it! N<"$.

urt!er Agreement 'it! 3ari <as )ompany 'as not rene'ed since

2414 Rs 15.61 billion.

$oss due to *iolation of "ublic "rocurement Rules- Rs 1.019 billion.

@!e transportation cost of R7 from ulfiqar 7il @erminal (7@&

Barac!i 'as !ig!er t!an t!at of "AR)7 'or?ing in t!e *icinity of3u:affargar!. Cad t!e fuel been purc!ased from "AR)7# loss of Rs.

1.019 billion 'ould !a*e been a*oided.

Finding regarding a *on-cas% $ettlement

a, "cess&unjustified adjustments& settlements/njustified settlement of circular debt Rs 2.14 billion

Rele*ant in*oices regarding adjustment of Rs 2.14 billion by

inance %i*ision 'ere not pro*ided.

b& cess payment to CD%7 due to non-pro*ision of standardi:edclause of energy "ayment in ""A = Rs 40.116 million.

Payment was made on the basis of average monthly generationinstead of Net 'lectrical *utput "N'*# dispatched due to non/provision

of standardi:ed clause of energy payment in the 3greement.

("ara-0.10.2&

• /njustified ecess adjustment of debt ser*ice liability in non-cas!

settlement against +A"%A (Cydroelectric& Rs 1.196 billion.



According to t!e reconciliation statement of debt ser*ice liability# t!e

total payable amount by <o*ernment of "a?istan on 01st 3ay# 2410

'as Rs .55 billion instead of Rs 94.450 billion. Cence# ecess

amount of Rs 1.196 billion 'as adjusted by t! inance %i*ision.

• /njustified payment on account of <eneral ale @a Rs 61.4million.4eneral +3'+ Ta "4+T#, despite being Pass through Item, was paid

without documentary evidence which was pre/re@uisite under the

provision of PP3.

• /njustified payment on account of le*y for RA Rs 24.1 million

There was no provision of payment of levy for I)+3 in the PP3 relating

to Chashma Nuclear Power Plant.

• /njustified ecess adjustment of debt ser*ice liability of Rs 6.2

billion in Non-cas! settlement against <N)7s.b, Ot%er !rregularities&lases

• Non-testing of 3etering ystem resulted in un-aut!entic meter reading

and billing of Rs 144.96 billion. A portion of t!is billing can t!erefore

be inaccurate and may !a*e resulted in a loss to t!e national

ec!equer.

Findings on IPP payments details.docx

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