ISLAMABAD: A appeal by the federal government to promote the arbitration of almost Rs300 billion worth of financial claims and counter-claims between different public sector agencies and K-Electric has been rejected by the Supreme Court.
Educated sources told Dawn that the government had recently asked the apex court to develop certain guiding principles for the resolution or arbitration of the privatised KE’s tremendous build-up of payables and receivables. Concise accounts of payables and receivables were also sent to the chambers of the supreme court.
In this regard, in addition to the chief executives of public and private sector companies, a battery of federal ministers, related secretaries and legal entities have called on Pakistan’s Chief Justice Gulzar Ahmed for a briefing on the sensitivities of growing circular debt involving KE, National Transmission & Despatch Company (NTDC), Sui Southern Gas Company Ltd (SSGCL), Karachi Water & Sewewe
A federal minister told the court that senior government leaders were unable to take the lead to resolve contentious sums because of the National Oversight Bureau’s worries (NAB). Over the past 5-6 years, a number of government secretaries and chief executives of corporations have refused to be dragged into arbitration or write-off lawsuits over such enormous financial changes.
Govt sought settlement of almost Rs300 billion worth of financial claims and counter-claims
As a result, not only had the prospective transfer of KE’s majority shares to Shanghai Electric been delayed for years, the struggling integrated public utility in the country’s largest metropolitan area was not doing enough to develop its system, impacting customers in the peak summers. The problem also hindered the signing of new power and gas supply agreements with KE that could lead to a shortage of 800-900 MW in Karachi in the coming summers.
In order to seek anonymity, at least two official sources present during the meeting stated that the chief justice was not likely to be drawn on commercial matters of a solely executive kind. The delegation was advised that for decades the top officials of the federal ministries and executives of the related corporations had been in the service of Pakistan and that, as elected members of the people, the ministers should resolve the issues on merit rather than shunning their duty and should not ask the court to take decisions on their behalf.
According to these sources, Minister of Planning and Development Asad Umar, who also heads the Cabinet Committee on Energy (CCoE), is expected to convene a meeting of heads of relevant agencies and companies to ensure that Karachi’s ongoing projects are implemented in a timely manner and to find a way out of bilateral financial resolution.
The NTDC and SSGCL charge against the KE on account of past energy and gas supply is at the heart of the issue with Rs272bn unpaid dues. Until these dues are cleared, both firms are hesitant to conclude fresh supply deals with KE. Of this, SSGCL claims Rs122bn against KE that, despite no structured gas supply arrangement, it claims to have established over the years. Even, before signing the PPA for additional power supply, the NTDC leadership needs clearance of its Rs150bn.
On the other hand, the KE argues Rs234bn against the government and its agencies on a gross payable basis and assumes public sector net payments of Rs80bn if all payables and receivables are paid on the basis of principal payment, i.e. if all parties give up mark-up and settle principal dues. Any of these numbers, however, at this point, are just statements.