IN THE SUPREME COURT OF PAKISTAN 
[Original Jurisdiction] 
 
 
 
 
 
 
 
PRESENT:  
 
MR. JUSTICE IFTIKHAR MUHAMMAD CHAUDHRY, CJ  
MR. JUSTICE KHILJI ARIF HUSSAIN  
 
HUMAN RIGHTS CASE NO.7734-G/2009 & 1003-G/2010  
 
 
 
[Alleged Corruption in Rental Power Plants]  
 
HUMAN RIGHTS CASE NO. 56712/2010  
 
[Fraud in payment of Rental Power Plants 
detected by NEPRA]  
 
Applicants in person:   
Makhdoom Syed Faisal Saleh Hayat,  
Federal Minister for Housing and Works  
Khawaja Muhammad Asif, MNA assisted by 
M/s Mustafa Ramday and Syed Ali Shah 
Gilani, Advocates  
 
Amicus Curiae: 
 
 
Mr. M. Anwar Kamal, Sr. ASC  
 
 
 
 
On Court Notice:  
 
For NEPRA:  
 
 
Syed Najmul Hassan Kazmi, Sr. ASC  
Mr. M. S. Khattak, AOR 
Syed Safeer Hussain, Registrar 
Syed Insaf Ahmad, DG 
 
 
For PEPCO/GENCOs/ 
 
Kh. Ahmed Tariq Rahim, Sr. ASC  
WAPDA & M/o W & P:   
Mr. Abbas Mirza, ASC 
Mr. Moazzam Ali Rizvi, ASC  
Syed Zafar Abbas Naqvi, AOR 
Mr. Arshad Ali Ch. AOR assisted by  
 
 
 
 
 
Mr. Ijaz A. Babar, Finance Director, PEPCO 
 
 
 
 
 
Barrister Asghar Khan, SML, PPIB 
 
 
 
 
 
 
Mr. Hamid Ali Khan, Addl. Secy. M/o W&P  
Mr. Masood Akhtar, GM NPCC  
Mr. Mansoor Ali Khan, CE, WPPO  
Rana Muhammad Amjad, GM, WPPO 
Rana Asif Saeed, Chief Legal Advisor  
Mr. Salman Iqbal, Executive Directed (Legal) 
Mr. Abdul Jabbar Memon, CRRO, WAPDA, KHI 
Mr. Anisuddin Alvi, DD, CRRO  
Mr. Razi Abbas, former CFO  
Mr. Abdul Jabbar Shaikh, DM, LPGCL  
HRC 7734-G/09 
[RPPs case] 
2 
 
Mr. Faizullah Dahri, FD, LPGCL  
Mr. Muhammad Anwar Brohi, CEO, LPGCL  
Mr. Sultan Muhammad Zafar, CEO, GENCO-III  
 
For Raja Pervez Ashraf  
Mr. Wasim Sajjad, Sr. ASC 
Former Minister W&P:    
Mr. M. S. Khattak, AOR assisted by 
 
 
 
 
 
Mr. Idrees Ashraf, Advocates 
 
For Karkey : 
 
 
Mr. Muhammad Akram Sheikh, Sr. ASC  
 
 
 
 
 
Mr. Azid Nafees, ASC assisted by 
 
 
 
 
 
Syed Ahmad Hassan Shah, Ms. Natalia  
 
 
 
 
 
Kamal and Sajeel Shehryar, Advocates  
 
 
 
 
 
 
For Gulf & Sialkot  
 
Syed Ali Zafar, ASC 
Power: 
 
 
 
Raja Zafar Khaliq, ASC 
Raja Abdul Ghafoor, AOR 
 
 
For Techno Sahuwal 
 
Raja M. Anwar-ul-Haq, ASC  
& Techno E Services: 
 
  
 
For Walters Power:  
 
Mr. Shahid Hamid, Sr. ASC 
Mr. M. S. Khattak, AOR   
 
For Pakistan Power: 
 
Dr. Parvez Hassan, Sr. ASC    
  
Mr. M. S. Khattak, AOR   
 
For Reshma Power 
 
Mr. Abdul Hafeez Pirzada, Sr. ASC  
& Kamoki Energy: 
 
Mr. Sikandar Bashir Mohmand, ASC 
 
 
 
 
 
Mr. Mehmood A. Sheikh, AOR assisted by 
 
 
 
 
 
M/s Hameed Ahmed and Mustafa Aftab  
 
 
 
 
 
Sherpao, Advocates. 
 
For Young Gen Power:   
Sh. Zamir Hussain, Sr. ASC 
 
For M/o Finance:   
 
Mr.  Muhammad Iqbal Awan, Addl. Secy  
 
For FBR 
 
 
 
Mr. Salman Siddique, Chairman FBR 
 
Dates of hearing:  
 
26-28 & 31 October, 1-4, 14-17 & 21-24  
 
 
November and 12-14 December, 2011  
…  
 
J U D G M E N T  
 
 
 
IFTIKHAR 
MUHAMMAD 
CHAUDHRY, 
CJ 
– 
The 
Constitution of the Islamic Republic of Pakistan mandates that State 
shall exercise its powers and authority through chosen representatives 
of the people. A democratic order in place, through the representatives 
of people, being the members of Parliament, obligates the elected 
HRC 7734-G/09 
[RPPs case] 
3 
representatives to fulfill their commitments bestowed upon them under 
the Constitution, and in their representative capacity, they are bound 
to perform their functions honestly, to the best of their ability, 
faithfully, in accordance with the Constitution and the law as well as 
the Rules of the Assembly, and always in the interest of sovereignty, 
integrity, solidarity, well being and prosperity of Pakistan. Such a 
binding force of the Constitution commands them to ensure well being 
and prosperity of Pakistan, so whenever they feel threat to the well 
being of the people of Pakistan for any reason, they are bound to 
preserve the same.   
2. 
  
Makhdoom 
Syed 
Faisal 
Saleh 
Hayat, 
one 
of 
the 
Parliamentarians of PML(Q) and its parliamentary leader in the 
National Assembly, now holding the office of Federal Minister for 
Housing & Works, through a press statement published in Daily 
“Nation” dated 8.9.2009, urged this Court to take action in respect of 
Rental Power Projects (RPPs) which, according to him, was just 
another name of corruption. He said that he had raised the issue of 
corruption in the award of RPPs before every forum, including the 
National Assembly of Pakistan, but his voice was not attended to, 
therefore, he had approached the Supreme Court for initiating suo 
motu proceedings against all those who were involved in this massive 
scam of US$ 5 billion, which was being skimmed from the pockets of 
innocent people of this country. Makhdoom Syed Faisal Hayat was 
asked to furnish evidence in support of allegations for further 
examination of the matter. He submitted a detailed application dated 
26.9.2009, wherein reiterating the allegations of corruption, he relied 
upon certain documents of the PEPCO, GENCOs, WAPDA and Ministry 
of Water & Power to prove his assertions. Thereafter, para-wise 
HRC 7734-G/09 
[RPPs case] 
4 
comments were called from WAPDA, which were submitted by M.D. 
PEPCO, denying the allegations/charges of corruption. However, it was 
emphasized that due to acute shortage of electric power in the 
country, short term measures in the shape of RPPs for three to five 
years were adopted pursuant to Rental Power Policy approved by 
Economic Coordination Committee (ECC) of the Cabinet, Government 
of Pakistan from time to time, inter alia, vide case No.ECC 135/9/2006 
dated 16.8.2006. Similarly, the other stakeholders denied the 
allegations of corruption.  
3. 
 
When the petition was pending for hearing, another 
eminent Member of the National Assembly, namely, Khawaja 
Muhammad Asif belonging to PML(N), vide CMA No.3100/2010, joined 
the proceedings w.e.f. 21.10.2010.  
LAW RELATING TO GENERATION AND TRANSMISSION OF 
ELECTRICITY 
 
4.  
 
In 1994, the Private Power and Infrastructure Board (PPIB) 
was created as “One Window Facilitator”, inter alia, with a view to 
promote private sector participation in the power sector of Pakistan 
and to facilitate investors in establishing private power projects and 
related 
infrastructure, 
execute implementation 
agreements 
with 
project sponsors and issue sovereign guarantees on behalf of 
Government of Pakistan. On 16.12.1997, to provide for the regulation 
of generation, transmission and distribution of electric power and 
matters connected therewith and incidental thereto, the Regulation of 
Generation, Transmission and Distribution of Power Act, 1997 
(hereinafter referred to as the “the Act, 1997”) was promulgated. 
Subsections (vi), (xi) and (xxvi) of section 2 of the Act, 1997, 
respectively, define “Distribution”, “Generation” and “Transmission” 
Companies. In 1998, Pakistan Electric Power Company (PEPCO) was 
HRC 7734-G/09 
[RPPs case] 
5 
incorporated under the Companies Ordinance, 1984 with a view to 
improve the efficiency of the power sector, to meet customers’ electric 
energy requirements on a sustainable and environmental friendly 
basis, to stop load shedding, to construct new grid stations, to reduce 
line losses, to minimize tripping and theft control, to revamp 
generation units and to improve customer services, and develop an 
integrated 
automated 
power 
planning 
system 
for 
generation, 
transmission and distribution to ensure system stability, fault isolation 
and upgrade relying, metering and tripping system at the level of 
National Transmission and Distribution Company (NTDC) as well as 
Distribution Companies (DISCOs).  
5. 
 
It may be stated that in Pakistan, electricity is produced 
from hydel, oil, gas, coal and nuclear sources. Hydel and thermal 
power generation was previously under the control of WAPDA. To 
augment the generation capacity to meet demand and eliminate 
inefficiencies due to WAPDA’s growth, demand suppression and high 
tariff policy and proliferated theft, WAPDA's Power Wing was 
restructured/segregated into twelve (12) distinct autonomous entities 
under the Companies Ordinance 1984, viz., three generation, one 
transmission and eight distribution corporate entities. Thus, electricity 
generation from thermal sources is under the control of Generation 
Companies (GENCOs) carved out of WAPDA, which are exclusively 
owned by the Government of Pakistan. These companies have long 
term projects called IPPs, spreading over a period of 25 to 30 years. 
The electric power generated by GENCOs is delivered to NTDC, which 
in turn, delivers the same to DISCOs. The DISCOs then sell it to the 
consumers under the contracts of electric powers on specified terms.  
HRC 7734-G/09 
[RPPs case] 
6 
6. 
 
It is to be noted that the most significant aspect of the 
generation, transmission and distribution of the electricity is the 
determination of tariff, which is done by a Regulatory Authority in 
accordance with the provisions of the Act, 1997 and the Rules made 
thereunder, as well as the Policy Guidelines issued by the Government 
of Pakistan under section 31 of the Act, 1997 from time to time. 
Importantly, the Policy should not be inconsistent with the Act, 1997. 
Therefore, WAPDA, in principle, has no power to interfere with the 
affairs of RPPs.   
7. 
 
Under section 3 of the Act, 1997, National Electric Power 
Regulatory Authority (NEPRA) consisting of a Chairman and four 
members, one from each province, to be appointed by the Federal 
Government, was established. Section 7 of the Act, 1997 prescribes 
powers and functions of the Authority as under: -  
“Powers and functions of the Authority: (1) The Authority 
shall be exclusively responsible for regulating the provision 
of electric power services. 
(2) 
In particular and without prejudice to the generality 
of the foregoing power, only the Authority, but subject to 
the provision of sub-section (4), shall,  
(a) 
grant licences for generation, transmission and 
distribution of electric power; 
(b) 
prescribe procedures and standards for investment 
programmes 
by 
generation, 
transmission 
and 
distribution companies; 
(c) 
prescribe and enforce performance standards for 
generation, transmission and distribution companies;  
(d) 
establish 
a 
uniform 
system 
of 
accounts 
by 
generation, transmission and distribution companies; 
(e) 
prescribe fees including fees for grant of licences and 
renewal thereof; 
(f) 
prescribe fines for contravention of the provisions of 
this Act; and 
(g) 
perform any other function which is incidental or 
consequential to any of the aforesaid functions. 
(3) 
Notwithstanding the provisions of sub-section (2) 
and without prejudice to the generality of the power 
conferred by sub-Section (1) the Authority shall, 
(a) 
determine tariff, rates, charges and other terms and 
conditions for supply of electric power services by 
the 
generation, 
transmission 
and 
distribution 
HRC 7734-G/09 
[RPPs case] 
7 
companies 
and 
recommend 
to 
the 
Federal 
Government for notification; 
(b) 
review 
organizational 
affairs 
of 
generation, 
transmission and distribution companies to avoid any 
adverse effect on the operation of electric power 
services and for continuous and efficient supply of 
such services; 
(c) 
encourage uniform industry standards and code of 
conduct for generation, transmission and distribution 
companies; 
(d) 
tender advice to public sector projects; 
(e) 
submit report to the Federal Government in respect 
of 
activities 
of 
generation, 
transmission 
and 
distribution companies; and 
(f) 
perform any other function which is incidental or 
consequential to any of the aforesaid functions. 
(4) 
Notwithstanding anything contained in this Act, the 
Government of a Province may construct power houses 
and grid stations and lay transmission lines for use within 
the Province and determine the tariff for distribution of 
electricity within the Province.  
(5) 
Before approving the tariff for the supply of electric 
power by generation companies using hydro-electric 
plants, the Authority shall consider the recommendations 
of the Government of the Province in which such 
generation facility is located. 
(6) 
In performing its functions under this Act, the 
Authority shall, as far as practicable, protect the interests 
of consumers and companies providing electric power 
services in accordance with guidelines, not inconsistent 
with the provisions of this Act, laid down by the Federal 
Government.  
In terms of sections 15, 16 and 20 of the Act, 1997, licenses for 
“Generation”, “Transmission” and “National Grid” are also to be 
granted by the NEPRA. Under section 7 of the Act, 1997, NEPRA has 
been empowered, inter alia, to establish uniform system of accounts in 
respect of generation, transmission and distribution companies and to 
determine tariff through competitive process in terms of the Guidelines 
for Determination of Tariff for IPPs issued by the Ministry of Water and 
Power in the month of November, 2005.  
INSTALLED CAPACITY TO GENERATE ELECTRICITY BEFORE 
INTRODUCING RPP 
 
8. 
 
Makhdoom Syed Faisal Saleh Hayat pointed out that as per 
brochure on “Solicitation For Fast Track IPP and Rental Power Projects 
HRC 7734-G/09 
[RPPs case] 
8 
through International Competitive Bidding” issued in pursuance of the 
decision taken in the Special Cabinet meeting in case No.59/08/2008 
dated 14.05.2008, presently the total installed electricity generation 
capability in the country was shown about 19478 MW, whereas as per 
PEPCO supply and demand position for the year 2009 it is 12074 MW 
and 17102 MW respectively in the months of March and September 
2009 out of total generation against the peak demand of 14686 and 
18110 MW as it has been shown in the chart presented by him along 
with his petition. The stand taken by the petitioner has been 
controverted by Khawaja Ahmad Tariq Rahim, learned counsel for the 
respondents as according to him the projected demand of electricity 
for the period 2010-2013 ranges between 19352 MW to 24126 MW. To 
substantiate his plea, he has also relied upon the ADB report. 
9. 
 
It is important to note that the learned counsel for the 
respondents has not disputed the contents of chart showing electricity 
generation position as prepared in the year 2009. Similarly, the figures 
quoted from ADB report about the higher demand on the growth 
production would be 8% in 2009 to 7.5% in the year 2013. The figures 
from the ADB report are as follows: -  
2010  
 
21838 
2011  
 
23476 
2012  
 
25185 
2013  
 
26978  
 
As far as above noted figures are concerned, there is no need to 
comment on the same because the contents of up to date generation 
position have been prepared by PEPCO for the year of 2008-2009 and 
onward whereas the projection of the increased demand by the ADB, 
which is also not disputed relates to the year 2010 and onward. What 
is important is that after having launched RPPs when there were 
objections from all and sundry about the corruption in the matter, 
HRC 7734-G/09 
[RPPs case] 
9 
which were being adhered to, the Government of Pakistan in the 
month of September, 2009 decided for the Rental Power Review by 
means of the process of 3rd Party Audit and the assignment was 
entrusted to ADB. It goes to establish that in the Special Cabinet 
meeting held on 14.05.2008, a decision based on the presentation of 
different Secretaries was taken. Summary of the meeting available on 
this file does not show that the then Secretary, Water & Power, who 
was primarily responsible under the Rules of Business, 1973 had put 
up the case after doing proper homework. Thus, initially there was a 
need of thorough probe into the RPPs by soliciting opinion of the 
experts on the subject and also having taken into consideration the 
benefit of the past experience relating to the year 2006 when the 
Rental Power Projects were initiated by the then Government at the 
locations known as Bhikki and Sharaqpur. Primarily, both these 
projects could not prove a success.  
10. 
  
The Government/Executive being the custodian of the 
national resources on behalf of the nation is bound to preserve and 
protect the same by strictly adhering to the relevant laws, 
conventions, experiences and have no authority to compromise with 
the resources, which fall within the definition of property in terms of 
constitutional provisions, belonging to general masses falling within 
the ambit of Article 24 of the Constitution.  
11. 
  
Makhdoom Syed Faisal Saleh Hayat, with the assistance of 
the charts which he had appended with his petition, persuaded us to 
believe that without “Rental Power Plants” to generate additional 
electricity, the existing generation capacity was sufficient to cater for 
the current requirements, but without properly exploiting its existing 
resources with a mala fide intention, process of RPPs were 
HRC 7734-G/09 
[RPPs case] 
10 
commenced. He referred to the energy policy issued in the year 2002 
and stated that in the years 2004 to 2007, Letters of Intent (LOIs) 
have been issued in respect of 34 out of 48 different projects for 
generating electricity i.e. Hydel-13, Oil-5, Gas/Dual Fuel-10 and Coal-6 
approximate capacity of each type of project being 2962, 1100, 1864, 
3550 (total 9476 MW); and again in the years 2005 to 2007, LOIs 
were issued for Oil-7, Gas/Dual Fuel-7 with expected capacity to 
produce 1231, 1359 (total 2590 MW). In this way, capacity was to be 
increased by 12066 MW (9476+2590). 
12. 
  
Learned counsel for the respondents, however, insisted 
that on account of projected increase in the demand, the existing 
capacity was not considered sufficient, therefore, to meet urgent 
demand Rental Power Projects were considered to be the solution to 
reduce day-to-day load-shedding. The argument so made by him 
might be very convincing, but due to non-denial of the quoted facts 
and figures relating to different projects and capability of generating 
more electricity, it cannot be denied that PEPCO has sufficient 
capability to increase its generation of electricity to meet the 
requirements. Admittedly, the figures shown on the PEPCO website, 
reference of which has been made during hearing of the case, were 
against the stand taken by learned counsel for the respondents. 
Perhaps the Authority finding no answer to the query raised by the 
Court from time to time about the generating capability of electricity 
stopped up-loading the figures of generation of electricity from 
different sources i.e. Hydel, GENCOs, IPPs, etc. and for such reason on 
06.10.2010 following order was passed by making the direction to the 
IT In-charge of the PEPCO: -  
“Petitioner Makhdoom Syed Faisal Saleh Hayat, during 
arguments has pointed out that in the petition/letter sent 
HRC 7734-G/09 
[RPPs case] 
11 
to this Court he has quoted important figures downloaded 
from official website of PEPCO in the year 2009 but later 
on such figures have been removed from the website of 
PEPCO. This statement so made by him seems to be true 
as per our own I.T. system which has been confirmed in 
Court by a responsible officer. Prima facie we are of the 
opinion that the PEPCO for the reasons known to its 
authority has removed these figures but retrieving of the 
same is important for the just decision of the case, 
therefore, we direct to the I.T. In-charge of the PEPCO to 
appear in person in Court and place on record authentic 
documents in respect of the entries mentioned in the 
application copy of which is available with the learned 
counsel for PEPCO and if readily is not available then he 
should retrieve the same from the master server.”   
 
Subsequent thereto the case remained pending but the figures were 
not retrieved from the main server as per the report, which we have 
obtained from the IT Department of this Court. The report of Data 
Processing Manager is reproduced hereinbelow:-  
“It is submitted that information regarding Power Generation & 
Generation contribution i.e. Hydel, PEPCO, Thermal, IPPS & 
Rental is 19.05.2011 no such information is available.  
 
There is no detail regarding the generation of electricity by 
PEPCO so far.” 
 
At the same time, in view of the non-availability of the information 
regarding generation of electricity by PEPCO on its website 
(www.pepco.gov.pk), on 16.3.2012 the Registrar was directed to 
procure the following information: -  
(i) 
Total generation capacity (Hydel, IPP, RPP, etc.); 
(ii) 
Total electricity generated for the last one year (Hydel,  
IPP, RRP, etc.), if shortage, assigned reasons; 
(iii) 
Detail of IPPs, which are generating and not generating 
electricity and the reasons for the same; 
(iv) 
Monthly/weekly average of production of each RPP; 
(v) 
Net demand of electricity for each month during the last 
one year; and 
(vi) 
As to why PEPCO website is not being updated? 
 
In response to above query, following details about the total installed 
generation capacity and dependable capacity have been received:- 
HRC 7734-G/09 
[RPPs case] 
12 
1 
2 
DEPENDABLE CAPACITY  
(MW) 
MONTH 
Total Generation 
Capacity 
/Installed 
Capacity 
 (MW) 
HYDEL 
IPP'S 
GENCO'S 
RENTAL 
TOTAL 
SCP 
Requirement 
# (i) 
(i) 
  
  
  
  
  
Mar-11 
20686 
3850 
8305 
3580 
323 
16058 
Apr-11 
21021 
4068 
8295 
3580 
594 
16537 
May-11 
21030 
5519 
8297 
3580 
594 
17990 
Jun-11 
21030 
5142 
8300 
3580 
594 
17616 
Jul-11 
21030 
5649 
8300 
3580 
594 
18123 
Aug-11 
21030 
6437 
8300 
3580 
594 
18911 
Sep-11 
21030 
6673 
8300 
3580 
594 
19147 
Oct-11 
21030 
6437 
8300 
3580 
594 
18911 
Nov-11 
21030 
4240 
8300 
3580 
594 
16714 
Dec-11 
21030 
4926 
8300 
3580 
594 
17400 
Jan-12 
21030 
4255 
8300 
3580 
594 
16729 
Feb-12 
21030 
5030 
8300 
3580 
594 
17504 
 
Similarly, the detail of total electricity generated, viz., the net demand 
and shortfall/load management was provided as under:- 
3 
4 
5 
Total Electricity Generated (MW) 
SCP Requirement # (ii) 
Net 
Demand 
of 
Electricity 
/ Peak 
System 
Demand 
(MW) 
Shortfall/ 
Load 
Management 
(MW) 
MONTH 
HYDEL 
IPP'
S 
GENCO'
S 
Monthly 
Av. 
Producti
on of 
RPPs 
TOTA
L 
 
 
HRC 7734-G/09 
[RPPs case] 
13 
SCP 
Requirement # 
(i) 
  
  
  
(iv) 
  
(v) 
  
Mar-11 
3454 
4741 
1789 
61 
10045 
14981 
4936 
Apr-11 
4216 
5923 
1377 
88 
11604 
15796 
4192 
May-11 
5228 
6931 
1462 
103 
13724 
17302 
3578 
Jun-11 
5145 
6790 
2000 
112 
14047 
18511 
4464 
Jul-11 
5224 
5636 
1793 
143 
12796 
18860 
6063 
Aug-11 
5657 
6632 
1859 
67 
14215 
18677 
4462 
Sep-11 
5995 
5197 
1256 
119 
12567 
18544 
5977 
Oct-11 
4359 
4109 
1268 
153 
9889 
17554 
7665 
Nov-11 
3993 
6647 
1547 
215 
12402 
14156 
1754 
Dec-11 
3784 
3760 
1701 
135 
9380 
14475 
5095 
Jan-12 
2472 
5498 
1708 
134 
9812 
13685 
3873 
Feb-12 
4923 
4830 
1587 
83 
11423 
14691 
3268 
 
Detail of power generated by IPPs under 1994 Power Policy during the 
period from March 2010 to February 2012 is given below:- 
SCP's Requirement # (iii), Detail of IPPs, which are generating not 
generating electricity and the reasons for the same (Part-1) 
 
Power Generated by IPPs under 1994 Power Policy 
For the Period Mar, 2011 to Feb, 12 
 
Sr. 
No. 
Plant Name 
Fuel 
Type 
Installed 
Capacity         
(MW) 
Depen
dable 
Capaci
ty         
(MW) 
Mar-
11 
Apr-
11 
May-
11 
Jun-
11 
Jul-
11 
Aug-
11 
Sep-
11 
Oct-
11 
Nov-
11 
Dec-
11 
Jan-
12 
Feb-
12 
Average  
Total 
1 
 KAPCO  
 RFO-
Gas-
HSD  
     1,638  
          
1,342  
          
746  
          
636  
          
751  
          
847  
          
631  
          
746  
          
438  
          
808  
          
696  
          
580  
          
555  
          
534  
            
664  
2 
 HUBCO  
 RFO  
     1,292  
          
1,200  
          
884  
       
1,083  
       
1,032  
       
1,064  
          
879  
       
1,107  
          
679  
          
789  
          
728  
          
811  
       
1,159  
          
841  
            921  
3 
 KEL   
 RFO  
        131  
             
124  
          
108  
            
96  
            
93  
          
105  
            
87  
          
105  
            
98  
            
91  
            
60  
            
58  
            
58  
            
65  
              
85  
4 
 Lalpir Power 
(Pvt.) Limited  
 RFO  
        362  
             
350  
          
112  
          
260  
          
152  
          
247  
          
248  
          
211  
          
202  
          
284  
            
56  
          
140  
          
189  
          
163  
            
189  
5 
 Pak Gen 
Power Limited  
 RFO  
        365  
             
349  
          
248  
            
60  
          
212  
          
246  
          
286  
          
278  
          
246  
          
204  
          
193  
          
178  
          
100  
            
-    
            
188  
6 
 SEPCOL  
 RFO  
        117  
         
110.47  
            
46  
            
24  
            
40  
            
39  
            
40  
            
42  
            
50  
            
42  
            
29  
            
32  
            
28  
            
20  
              
36  
7 
 Habibullah 
Coastal  
 Gas  
        140  
         
129.15  
            
64  
            
96  
          
105  
            
76  
            
55  
            
51  
          
106  
            
84  
            
71  
            
69  
            
19  
            
38  
              
69  
HRC 7734-G/09 
[RPPs case] 
14 
8 
 FKPCL  
 Gas  
        157  
         
151.20  
          
135  
          
126  
          
142  
          
142  
          
144  
          
144  
            
98  
          
106  
          
152  
          
155  
          
154  
          
144  
            
137  
9 
 Rousch  
 Gas  
        450  
             
395  
          
312  
          
316  
          
370  
          
358  
          
372  
          
378  
          
372  
          
394  
          
311  
          
380  
          
414  
          
378  
            
363  
10 
 Saba  
 RFO  
        134  
         
125.55  
            
14  
            
27  
            
15  
            
20  
            
21  
            
21  
            
25  
            
21  
              
0  
            
28  
              
3  
              
7  
              
17  
11 
 Japan Power  
 RFO  
        135  
         
107.00  
            
34  
            
42  
            
47  
            
41  
            
31  
            
59  
            
42  
            
48  
            
45  
            
25  
            
36  
            
31  
              
40  
12 
 Uch Power  
 Gas  
        586  
         
551.25  
          
535  
          
524  
          
516  
          
490  
          
499  
          
505  
          
507  
          
525  
          
292  
          
492  
          
562  
          
410  
            
488  
13 
 Altern Energy  
 Gas  
         31  
          
26.54  
            
26  
            
25  
            
28  
            
26  
            
27  
            
26  
            
26  
            
29  
            
29  
              
0  
            
-    
              
0  
              
20  
14 
 Liberty Power  
 Gas  
        235  
       
211.84
8  
            
-    
          
114  
          
188  
          
185  
          
185  
          
166  
          
165  
          
187  
          
185  
          
175  
          
186  
          
101  
            
153  
Sub. Total 
  
     5,773  
          
5,172  
       
3,263  
       
3,429  
       
3,691  
       
3,885  
       
3,506  
       
3,841  
       
3,052  
       
3,610  
       
2,848  
       
3,122  
       
3,463  
       
2,732  
         
3,370  
15 
 
CHASNUPP-
I  
 
Nuclear  
        325  
             
300  
          
300  
          
282  
          
289  
          
273  
          
288  
            
20  
            
-    
          
238  
          
263  
          
302  
          
301  
          
299  
            
238  
16 
 
CHASNUPP-
II  
 
Nuclear  
        340  
             
300  
            
-    
          
134  
          
216  
          
233  
          
270  
          
227  
          
289  
          
275  
          
294  
          
206  
          
284  
          
303  
            
227  
17 
 Tavanir, Iran  
  
          -    
               
39  
            
30  
            
32  
            
32  
            
30  
            
32  
            
30  
            
31  
            
31  
            
31  
            
29  
            
28  
            
29  
              
30  
Total 
  
     6,438  
          
5,811  
       
3,594  
       
3,876  
       
4,227  
       
4,421  
       
4,096  
       
4,118  
       
3,372  
       
4,155  
       
3,435  
       
3,659  
       
4,077  
       
3,363  
         
3,866  
 
The reasons assigned for power shortages are as under:- 
 
Requirements as per Serial Nos (ii) and (iii) of the of the 
Directions of Hon’able Supreme Court of Pakistan 
 
 
(ii)  
Total electricity generated for the last one year 
(Hydel, IPP,  
RPP, etc.) if shortage, assigned 
reasons. 
(iii)  Detail of IPPs, which are generating and not 
generating  electricity and the reasons for the same 
 
Operational Constraints of the Power Generation & 
Distribution System 
 
1. 
Diversion of gas, reduced power generation and 
increased cost of generation whereas no tariff 
increase allowed from FY 2003 to FY 2007, despite 
steep increase in generation cost due to surge in oil 
prices. 
1. 
Overdue rehabilitation of distribution network and 
Public Sector Generation Companies (most of the 
plants have been outlived) due to time and financial 
constraints causing increase in distribution and 
generation losses. 
2. 
Increased non payment of bills (collection issues, 
including extra ordinary stay by the courts) and 
Kunda Culture 
3. 
Mismatch between cost of supply and tariff triggered 
birth of circular debt and adversely affected fuel 
supplies to IPPs and GENCOs plants. 
4. 
IRSA releases water from dams exclusively as per 
cultivation 
requirement 
and 
not 
for 
power 
requirement. 
HRC 7734-G/09 
[RPPs case] 
15 
 
Other Reasons: 
 
5. 
Public Sector was not allowed to add new capacity in 
thermal since long time resulting in no capacity 
additions during 2003-2008 
6. 
Quantum jump in power demand (7% to 14%) due 
to: 
 Consumption led growth strategy of 2002-2008 – 
influx of millions of household appliances. 
 Continuous increase in rural electrification since 
2002 onwards 
 Increased demand for agri-tubewell loads – over 
80,000 new connections. 
7. 
Extra high Load growth in urban areas (20%) 
8. 
Air-conditioning load exceeds 5000 MW and is being 
added each year. 
 
Following reasons were given by the PEPCO/PITC for not updating the 
website: - 
1. 
PITC has been updating the information on website 
on the basis of information provided by concerned 
departments. 
2. 
Last information regarding news & media was 
provided to PITC on September 2010 and uploaded 
accordingly. 
3. 
The information regarding power situation has been 
provided 
by 
PEPCO 
media 
cell 
to 
PITC 
on 
19/05/2011 which was instantly updated. Since then 
PITC has not received any information. 
4. 
Information regarding power produced by IPPs & 
Rental power is being provided by WPPo & CPPA and 
updated till June 2011 (Cumulative July 10-June 11). 
5. 
PITC will make all efforts to get the updated 
information from concerned departments and upload 
on regular basis. 
 
Besides the figures noted hereinabove, PEPCO provided following 
information of power generation capability for Hydel plants, GENCOs 
IPPs, to the ADB: -  
PEPCO SUPPLY & DEMAND POSITION: 2008-2012 
UPDATED IN MARCH 2009 
 
2008-09 
2009-10 
 
Description  
Mar 
Apr 
May 
Jun 
Jul 
Aug 
Sep 
Oct 
Nov 
Dec 
 
A. 
 
(i) 
(ii) 
(iii) 
Committed 
Generation 
Capability 
Hydel 
GENCOs 
IPPs 
 
 
 
3295 
4314 
6181 
 
 
 
3863 
4512 
6197 
 
 
 
4793 
4660 
6204 
 
 
 
5035 
4689 
6615 
 
 
 
5657 
4788 
6618 
 
 
 
6026 
4788 
7205 
 
 
 
5979 
4792 
7570 
 
 
 
5036 
4796 
7763 
 
 
 
5545 
4861 
7750 
 
 
4183 
4916 
8402 
 Total (A) 
13790 14572 15657 16339 17063 18019 18341 17595 18156 17501 
B. 
 
C. 
Forced Outages 
Maintenance 
Reserves 
889 
 
827 
913 
 
589 
931 
 
303 
960 
 
154 
972 
 
18 
1007 
 
105 
1029 
 
210 
1041 
 
1178 
1048 
 
3364 
1094 
 
2431 
D. Firm 
12074 13070 14423 15225 16073 16907 17102 15376 13744 13976 
HRC 7734-G/09 
[RPPs case] 
16 
Generation 
Capability (A-
B-C) 
E. Peak Demand 
14686 15899 17004 17824 17898 17936 18110 16453 14777 14931 
F. Surplus/Deficit 
Generation 
(+/-) 
-2612 -2829 -2581 -2599 -1825 -1029 -1008 -1077 -1033 
-955 
 
 
The above chart with the updated information about the supply and 
demand position from 2008 to 2012 reproduced hereinabove and 
latest information supplied during the hearing of the case suggest a 
noticeable difference supplied by the PEPCO on different occasions. 
Thus, no other inference can be drawn except that correct facts are 
being concealed by the respondent PEPCO without any justifiable 
reason. However, it strengthens the viewpoint of petitioner Makhdoom 
Syed Faisal Saleh Hayat that RPPs have been introduced without any 
feasibility study and it has left a big question mark on the 
transparency of the project.  
13. 
 
It is to be noted that updated data so far received from 
time to time, as is evident from the perusal of above documents, 
makes it abundantly clear that no authentic and acceptable 
information is available, therefore, the argument so raised by 
Makhdoom Syed Faisal Saleh Hayat gets strengthened that without 
undertaking any feasibility study, RPPs were launched in a haste. A 
perusal of ADB report establishes that ever since the present 
Government came into power in the month of March, 2008, country is 
facing shortfall of electricity because of increase in number of 
consumers of electricity day by day as the population is increasing, but 
instead of pursuing long term projects like strengthening the already 
existing sources of electricity generation including hydel, thermal 
through GENCOs and IPPs through PEPCO, to meet the shortfall, the 
idea of RPPs was resorted to. The statistics provided by PEPCO vide 
letter dated 16.3.2012, reproduced hereinabove, also disclose the 
HRC 7734-G/09 
[RPPs case] 
17 
reasons on account of which IPPs are not generating/functioning to 
their full capacity for the reasons noted hereinabove. Therefore, the 
Government instead of launching Rental Power Projects, could have 
conveniently strengthened the IPPs, which are already working and the 
IPPs and hydel projects, which were likely to commence generation of 
electricity in the year 2009-2010 as per following details: -  
Project Name 
Capacity in MW 
Completion 
Date 
Attock Gen Power Project 
165 
7th April, 2009 
Zorlu Wind Power Project 
50 
19th April, 09 
Orient Power Project 
225 
May, 09 
(delayed) 
Atlas Power Project 
225 
June, 09 
(Delayed) 
Muridke (Sapphire)Power 
Project 
225 
July, 09 
(Delayed) 
Fauji Mari Power Project 
202 
August,09 
(Delayed) 
Nishat Power Project 
200 
Nov, 09 
Engro Power Project 
227 
Dec, 09 
Total 
1519 
 
 
A cursory glance at the above comparative table shows that with the 
interest and encouragement of PEPCO in the month of December, 
2009, 1519 MW was likely to be available. Statedly, a good number of 
hydel plants are likely to generate electricity. It is not known as to 
whether any attention is paid by the PEPCO for the completion of the 
same or not. Another important aspect, which can be gathered from 
the data/statistics provided subject to authenticity of the same, at 
present following RPPs are functioning:- 
Monthly Average Production of Each RPP 
SCP Requirement # (iv)  
KARKEY 
231.8 
MW 
COD 
GULF 
62 
MW 
COD  
NAUDERO-
I 51 MW 
COD 
Reshma 
201 MW 
COD 
Techno E-
Power 
150 MW 
COD 
Total 
Production 
(MW) 
MONTH 
MW 
MW 
MW 
MW 
MW 
  
Mar-11 
0 
61 
0 
0 
0 
61 
Apr-11 
31 
57 
1 
0 
0 
88 
May-11 
41 
61 
1 
0 
0 
103 
HRC 7734-G/09 
[RPPs case] 
18 
Jun-11 
43 
61 
8 
0 
0 
112 
Jul-11 
54 
60 
30 
0 
0 
143 
Aug-11 
65 
2 
0 
0 
0 
67 
Sep-11 
43 
56 
20 
0.43 
0 
119 
Oct-11 
75 
54 
0 
24 
0 
153 
Nov-11 
81 
58 
12 
63 
0 
215 
Dec-11 
54 
62 
19 
0 
0 
135 
Jan-12 
61 
54 
19 
0 
0 
134 
Feb-12 
32 
51 
0 
0 
0 
83 
 
POLICY FOR RPPs 
14. 
 
We have inquired from the learned counsel of PEPCO, 
GENCOs and WAPDA as well as worthy former Minister for Water & 
Power, Raja Parvez Ashraf as to whether any policy was formulated 
while adopting the phenomenon of rental power plants to generate 
electric power, they pointed out that the concept and the rationale 
behind the scheme of introducing Rental Power Plants in the country 
was floated by the previous Government as a quick way to address 
impending power shortages. References have been made by them to 
the Cabinet decision bearing No.ECC-135/9/2006 dated 16.08.2006. 
They also pointed out that the justification put forward by the then 
Government in installing the plants was that “the rental plants are 
expensive, however, given the urgency to have additional power 
capacity before next summer as per WAPDA’s demand projections and 
the long gestation period for new plants, renting of plant(s) appears to 
be the only short term solution if shortfalls are to be met”. And the 
summary of ECC dated 12.08.2006 was submitted to the Cabinet for 
approval, which reads as under:- 
“6. 
Following 
policy 
guidelines 
are 
proposed 
for 
approval:- 
(i) 
Allow 
renting 
of 
power 
plant/plants 
by 
WAPDA/NPGCL as an emergency measure, subject to 
HRC 7734-G/09 
[RPPs case] 
19 
acceptance of tariff by NEPRA, and that WAPDA 
should only rent as much power as is absolutely 
necessary and which would be utilised with high load 
factor for economic utilisation of capacity; 
(ii) 
Approve proposal at para 5 for provision of gas to 
rented plant/plants; and 
(iii) 
Nearest possible location to the load centres of 
Gujranwala, Faisalabad or Lahore to install the plant. 
However, if it is necessary to locate the plant at 
Multan then it should be ensured that there are no 
transmission bottlenecks. 
… … … … … … … … … … … … … … … … … … … … … … … … … 
… … …  
8. 
Proposal at para 6 above be approved. Suggestion of 
Planning Division should also be taken into account by 
WAPDA/NPGCL.” 
They were also of the opinion that under Rule 16(F) any case 
pertaining to the generation of electricity and laying of inter-provincial 
transmission lines was to be placed before the Cabinet and no sooner 
it was approved, it would become the policy of the Government on a 
particular subject, therefore, any decision taken in that behalf would 
be deemed to be the policy. Learned counsel for WAPDA, PEPCO, 
GENCOs, etc., has already referred to certain decisions of ECC and the 
Cabinet, which have been reproduced hereinabove, however, the ECC 
in its meeting dated 10.09.2008 directed that in case any of the 
approved projects failed to achieve crucial milestones towards timely 
project implementation as per agreements, then the projects would be 
immediately cancelled with penalties and that the deficit power 
generation capacity be expeditiously arranged through addition of 
IPPs/RPPs, both solicited and unsolicited on fast track basis. Guidelines 
by the ECC incorporated in this decision are reproduced herein below:- 
a. 
Proposals for rental power plants would be based on dual 
fuel (Gas and RFO)/single fuel RFO and would be 
implemented in shortest possible time. 
b. 
Rental Power Plants would be arranged for a period of 3+1 
years. 
c. 
Efforts would be made that the tariff of rental power plants 
is lower than the tariff allowed to IPPs based on similar 
technology for their first ten years.  
HRC 7734-G/09 
[RPPs case] 
20 
d. 
Mandatory storage of oil for rental power plants would be 
for ten days. 
e. 
PEPCO would revaluate the sites for the rental power 
plants on the basis of space for oil storage, transportation 
of oil to the site, environmental aspects and power 
evacuation etc. 
f. 
PEPCO would prepare a mid term revised forecast for 
demand and supply of power and PPIB would provide 
necessary input/data to PEPCO in respect of prospective 
IPPs.  
g. 
Secretaries of Finance and Water & Power along with 
Managing Director, PPRA would review the mechanism of 
procurement to ensure that future delay is avoided and 
Public Procurement Rules, 2004 are observed in letter and 
spirit.  
 
Above guidelines by the ECC along with other decisions of the ECC 
referred to hereinabove, if for the sake of arguments are considered to 
be the policy of the Government, then emphasis should be that such 
guidelines (policy) have to be implemented in letter & spirit. Exception 
to above guidelines is also possible to the extent of unsolicited RPPs, 
which cast duty upon the Secretaries of Finance and Water & Power 
along with Managing Director of PEPRA to review mechanism of 
procurement to ensure that future delay is avoided and Public 
Procurement Rules, 2004 are observed in letter & spirit.  
POWERS 
OF 
JUDICIAL 
REVIEW 
TO 
INTERFERE 
IN 
THE 
GOVERNMENT POLICIES  
 
15. 
  
It is to be clarified that the Government of the day under 
Article 29 read with Article 2A of the Constitution is bound to formulate 
policies for the promotion of social and economic well being of the 
people, which includes provision of facilities to the citizens for work 
and adequate livelihood with a reasonable rest and leisure, etc. 
Energy/electricity is essentially one of the significant facilities required 
by the citizens for manifold purposes, namely, uplifting of their social 
and economic status. Non-supply of electricity to the citizen regularly, 
is tantamount to depriving them of one of the essentials of the life 
including the security of economic activities, which are relatable to 
HRC 7734-G/09 
[RPPs case] 
21 
their fundamental rights protected under Articles 9 and 14 of the 
Constitution. In the cases of Bank of Punjab v. Haris Steel Industries 
(PLD 2010 SC 1109), Liaqat Hussain v. The Federation of Pakistan 
(Constitution Petition No.50/2011), In Re: Human Rights Case 
regarding fast food chain in F-9 Park (PLD 2010 SC 759), In Re: SMC 
No.13/2009 (Case regarding Multi-Professional Housing Schemes) 
(PLD 2011 SC 619) and Shehla Zia v. WAPDA (PLD 1994 SC 693), 
Article 9 has been interpreted and its scope has been enlarged to each 
and every aspect of human life. Therefore, whenever a policy is 
framed with reference to uplifting the socio-economic conditions of the 
citizens, object should be to ensure enforcement of their fundamental 
rights.  
16. 
 
The Courts are not required to examine the policy as it has 
been rightly urged by Raja Parvez Ashraf, former Minister of Water & 
Power during whose tenure, in the meeting held on 27.03.2008, 
decision was taken in the Cabinet for solicitation of Fast Track Power 
Generation Projects to overcome the gap of 2200 MW between the 
production and demand of electricity in the system till April, 2009. 
Reliance on the case of BALCO Employees Union (Regd.) v. Union of 
India (AIR 2002 SC 350) has rightly been placed by him. A 9-Member 
Bench of this Court had also decided in the case of Watan Party v. 
Federation of Pakistan (PLD 2006 SC 697) regarding power of Court to 
examine the polices of Government. Relevant Paras therefrom are 
reproduced hereinbelow: -  
“57. The next question is in respect of the judicial review 
of the policies of the Government. It is well settled that 
normally in exercise of the powers of judicial review this 
Court will not scrutinize the policy decisions or to 
substitute its own opinion in such matters as held in 
Messrs Elahi Cotton Mills ibid. Likewise in the case of Balco 
Employees ibid, the Supreme Court of India observed as 
follows:-- 
HRC 7734-G/09 
[RPPs case] 
22 
  
"Process of disinvestments is a policy decision 
involving complex economic factors. The Courts have 
consistently refrained from interfering with economic 
decisions as it has been recognized that economic 
expediencies lack adjudicative disposition and unless 
the 
economic 
decision, 
based 
on 
economic 
expediencies, is demonstrated to be so violative of 
constitutional or legal limits on power or so 
abhorrent to reason, the Courts would decline to 
interfere. In matters relating to economic issues, the 
Government has while taking a decision, right to 
"trial and error" as long as both trial and error are 
bona fide and within limits of authority." 
  
This view is in line with this Court's view as given in Elahi 
Cotton ibid. Similar view was taken by the Indian Supreme 
Court in Delhi Science Forum v. Union of India (AIR 1996 
SC 1356). 
  
58. The parameters of judicial review were graphically 
commented upon in Associated Provincial Picture Houses 
Ltd. ibid which has been relied upon by counsel for both 
sides where in the concluding paragraph the Court came to 
the conclusion in the words of Lord Somervell as under: - 
  
"I do not wish to repeat what I have said, but it 
might be useful to summarize once again the 
principle; which seems to me to be that the court is 
entitled to investigate the action of the local 
authority with a view to seeing whether it has taken 
into account matters which it ought not to take into 
account, or, conversely, has refused to take into 
account or neglected to take into account matters 
which it ought to take into account. Once that 
question is answered in favour of the local authority, 
it may still be possible to say that the local authority, 
nevertheless, 
have 
come 
to 
a 
conclusion 
so 
unreasonable that no reasonable authority could 
ever have come to it. In such a case, again, I think 
the court can interfere. The power of the court to 
interfere in each case is not that of an appellate 
authority to override a decision of the local authority, 
but is that of a judicial authority which is concerned, 
and concerned only, to see whether the local 
authority have contravened the law by acting in 
excess of the powers which Parliament has confided 
in it. " 
  
This view was further reiterated and the principle laid down 
therein was followed in Nottinghamshire County Council v. 
Secretary of State for the Environment [(1986) 1 All ER 
199] wherein the Court observed as follows: 
  
"The 
law 
has 
developed 
beyond 
the 
limits 
understood to apply to judicial review as practiced by 
HRC 7734-G/09 
[RPPs case] 
23 
the courts in 1947. The ground on which the courts 
will 
review 
the 
exercise 
of 
an 
administrative 
discretion by a public officer is abuse of power. 
Power can be abused in a number of ways: by 
mistake of law in misconstruing the limits imposed 
by statute (or by common law in the case of a 
common law power) on the scope of the power; by 
procedural irregularity; by unreasonableness in the 
Wednesbury sense; or by bad faith or an improper 
motive in its exercise. A valuable, and already 
‘classical’; but certainly not exhaustive analysis of 
the grounds on which courts will embark on the 
judicial review of an administrative power exercised 
by a public officer is now to be found in Lord 
Diplock's speech in Council of Civil Service Unions v. 
Minister for the Civil Service [1984] 3 All ER 935, 
[1985] AC 374."  
  
There is no cavil to the proposition being espoused by 
learned Attorney General with reference to Peter Can's "An 
Introduction to Administrative Law" 2nd Edition that the 
Court while exercising power of judicial review may not 
express opinions on polycentric issues requiring technical 
expertise and specialized knowledge. In the instant case, 
however, we are seized not with a polycentric issue as 
such 
but 
with 
the 
legality, 
reasonableness 
and 
transparency of the process of privatization of the project 
under consideration i.e. PSMC. These are well established 
basis for exercise of judicial review. Thus it is held that, in 
exercise of the power of judicial review, the courts 
normally will not interfere in pure policy matters (unless 
the policy itself is shown to be against Constitution and the 
law) nor impose its own opinion in the matter. However, 
action taken can always be examined on the well 
established principles of judicial review.” 
 
In the light of the above dictum, there could be no cavil with the 
proposition that as far as transparency in the implementation of the 
policy, if available, the process of awarding contract is concerned, it 
squarely falls within the jurisdiction of this Court available to it under 
the Constitution and the power of judicial review. Reference may be 
made to the cases of  Iqbal Haider v. Capital Development Authority 
(PLD 2006 SC 394), Pakistan Steels (PLD 2010 SC 759), HRC No. 
4688/06 (PLD 2001 SC 619), Ramana Dayaram Shetty v. International 
Airport Authority of India [(1979) 3 SCC 489]; Tata Cellular v. Union 
of India [(1994) 6 SCC 651] = (AIR 1996 SC 11); Raunaq 
HRC 7734-G/09 
[RPPs case] 
24 
International Ltd. v. I.V.R. Construction Ltd. (AIR 2004 SC 4299) = 
[(1999) 1 SCC 492]; Air India Ltd. v. Cochin International Airport Ltd. 
[(2000) 2 SCC 617]; Reliance Energy Ltd. v. Maharashtra State Road 
Development Corp. Ltd. [(2007) 8 SCC 1] and judgment dated 
24.08.2009 of the Andhra Pradesh High Court in Nokia Siemens 
Networks Pvt. Ltd. v. Union of India.  
TRANSPARENCY OF CONTRACTS 
17. 
 
It is important to note that all the executive authorities are 
bound to enter into contracts for supplies at the least expense to the 
public exchequer. Most significant consideration for every department 
of the Government must be the best economical mode of meeting the 
public needs. Agreements for pecuniary considerations are against 
public policy, as such, are void. Reference in this behalf may be made 
to the case of Tool Company v. Norris [69 U.S. (2 Wall.) 45 (1864)], 
wherein the Supreme Court of United States, as back as in 1864, has 
held that all contracts for supplies should be made with those, and 
with those only, who will execute them most faithfully, and at the least 
expense to the government. Considerations as to the most efficient 
and economical mode of meeting the public wants should alone 
control, in this respect, the action of every department of the 
government. No other consideration can lawfully enter into the 
transaction, so far as the government is concerned. Such is the rule of 
public policy, and whatever tends to introduce any other elements into 
the transaction is against public policy. That agreements, like the one 
under consideration, have this tendency is manifest. They tend to 
introduce personal solicitation and personal influence as elements in 
the procurement of contracts, and thus directly lead to inefficiency in 
the public service and to unnecessary expenditures of the public funds. 
HRC 7734-G/09 
[RPPs case] 
25 
… … … it is sufficient to observe generally that all agreements for 
pecuniary considerations to control the business operations of the 
government, or the regular administration of justice, or the 
appointments to public offices, or the ordinary course of legislation, 
are void as against public policy, without reference to the question, 
whether improper means are contemplated or used in their execution. 
The law looks to the general tendency of such agreements, and it 
closes the door to temptation, by refusing them recognition in any of 
the courts of the country. Every action taken by the Government must 
be in public interest and its action would be liable to be invalidated on 
the touchstone of reasonableness and public interest and if it fails to 
satisfy either test, it would be unconstitutional and invalid. Reference 
in this behalf may be made to the case of R.D. Shetty v. International 
Airport Authority of India (AIR 1979 SC 1628). Further, in the case of 
Nagar Nigam, Meerut v. Al Faheem Meat Exports (Pvt.) Ltd. [(2007) 1 
Supreme 704] it has been held as under:- 
“The law is well-settled that contracts by the State, its 
corporations, instrumentalities and agencies must be 
normally granted through public auction/public tender by 
inviting tenders from eligible persons and the notification 
of the public-auction or inviting tenders should be 
advertised in well known dailies having wide circulation in 
the locality with all relevant details such as date, time and 
place of auction, subject-matter of auction, technical 
specifications, estimated cost, earnest money Deposit, etc. 
The award of Government contracts through public-
auction/public tender is to ensure transparency in the 
public procurement, to maximize economy and efficiency 
in 
Government 
procurement, 
to 
promote 
healthy 
competition among the tenderers, to provide for fair and 
equitable treatment of all tenderers, and to eliminate 
irregularities, interference and corrupt practices by the 
authorities concerned. This is required by Article 14 of the 
Constitution. … … In our opinion this is an essential 
requirement in a democracy, where the people are 
supreme, and all official acts must be actuated by the 
public interest, and should inspire public confidence.” 
 
HRC 7734-G/09 
[RPPs case] 
26 
In the case of Ramana Dayaram Shetty vs The International Airport 
Authority of India (AIR 1979 SC 1628), the Court has held as under:- 
“… … dealing with the public, whether by way of giving 
jobs or entering into contracts or issuing quotas or licences 
or granting other forms of largess, the Government cannot 
act arbitrarily at its sweet will and, … … its action must be 
in conformity with standard or norms which is not 
arbitrary, irrational or irrelevant. The power or discretion 
of the Government in the matter of grant of largess 
including award of jobs, contracts, quotas, licences etc., 
must be confined and structured by rational, relevant and 
non-discriminatory 
standard 
or 
norm 
and 
if 
the 
Government departs from standard or norm in any 
particular case or cases, the action of the Government 
would be liable to be struck down, unless it can be shown 
by the Government that the departure was not arbitrary, 
but was based on some valid principle which in itself was 
not irrational, unreasonable or discriminatory.” 
 
In the case of Ram & Shyam Co. v. State of Haryana (AIR 1985 SC 
1147), the Indian Supreme Court has held as under:- 
“… … disposal of public property partakes the character of 
a trust in that in its disposal there should be nothing hanky 
panky and that it must be done at the best price so that 
larger revenue coming into the coffers of the State 
administration would serve public purpose viz. the welfare 
State may be able to expand its beneficent activities by 
the availability of larger funds. … … where disposal is for 
augmentation of revenue and nothing else, the State is 
under an obligation to secure the best market price 
available in a market economy.” 
 
In the case of Haji T.M. Hasan vs. Kerala Financial Corpn. (AIR 1988 
SC 157), the Court observed that: -  
“It is needless to state that the Government or public 
authorities should make all attempts to obtain the best 
available price while disposing of public properties.  They 
should not generally enter into private arrangements for 
the purpose.” 
  
As it has been noted hereinabove that no feasibility study was 
undertaken by the previous Government during whose period 
unsolicited RPPs were awarded to Alstom at Bhikki and General Electric 
Power at Sharaqpur, inasmuch as, no material/documents have been 
produced on record to show that both the Governments introduced the 
HRC 7734-G/09 
[RPPs case] 
27 
phenomenon of RPPs after due diligence. From reply submitted on 
behalf of GENCOs as well as the former Minister for Water & Power, 
impression is gathered that they have outrightly accepted the proposal 
of RPPs without examining its merits and de-merits. In this behalf the 
first special meeting of the Cabinet was held on 14.5.2008 wherein the 
decision was taken for Fast Track Implementation of Power Generation 
Projects to meet the demand and supply gap. As per the decision 
contained in Package-B, Rental Power Plants of 200 to 300 MW were 
approved. On the basis of said decision, advertisements were made 
wherein bids were invited for setting RPPs, details whereof have been 
mentioned hereinabove. Had there been due diligence before 
approving above package, it would have seen the implication of the 
billions of rupees by increasing down payment from 7% to 14%. As 
per above advertisement, GENCO who had licence to generate 
electricity and then to supply it to NTDC was not party in inviting bids.  
18.   
Internationally, the following factors have been considered 
key features in procurement of public contracts: -  
(1) 
Upholding competition among firms; 
(2) 
Promoting best value for money; 
(3) 
Encouraging more firms to bid on work; 
(4) 
Maintaining openness and transparency in the 
bidding process;  
(5) 
Executing contracts quickly;  
(6) 
Ensuring quality of goods and services; and  
(7) 
Meeting 
other 
obligations 
required 
for 
federal 
procurement.  
19. 
 
In this regard, it is to be noted that in section 5 of the 
Public Procurement Regulatory Authority Ordinance, 2002, the 
functions and the powers of the Authority have been defined, 
according to which the Authority may take such measures and exercise 
such powers as may be necessary for improving governance, 
management, transparency, accountability and quality of public 
HRC 7734-G/09 
[RPPs case] 
28 
procurement of goods, services and works in the public sector. The 
words ‘transparency’ and ‘accountability’ are of high importance and 
cast a duty upon the Authority who had invited the bids to ensure 
openness of the transaction without withholding any information. The 
competition to establish transparency between the interested parties is 
in fact the theme of the PEPRA Ordinance as well as the Rules framed 
thereunder (Public Procurement Rules, 2004). The bidders have to 
compete with each other by filing their respective bids, therefore, 
while making procurement of an item like electricity through RPPs the 
Authority is required to fix a reserved price while quoting lump sum 
Rental Charges, Rental Rate and Reference Fuel Cost Components. In 
absence of such reserved prices, there would not be transparent 
competition and accountability of the bidders and procurers. In the 
case of McManus v. Fortescue [(1907) 2 KB 1], it has been held by 
Court of Appeal that in a sale by auction, subject to reserve price, 
every offer/bid and its acceptance is conditional; the public is informed 
by the fact, that the sale is subject to a reserve price; the auctioneer 
has agreed to sell for the amount which the bidder is prepared to give 
only in case that amount is equal to or higher than the reserve price; 
the reserve price puts a limit on the authority of the auctioneer and he 
cannot accept a price below the upset/reserve price. In the instant 
case, neither the reserved price has been mentioned in the publication, 
in pursuance whereof the bids were invited, nor such reserve price has 
been disclosed in RFP. Inasmuch as, in advertisement made by PPIB, 
except mentioning Rental Power Projects of 200 MW cumulative 
capacity near Karachi, neither the sites were indicated nor the type of 
fuel or technology of plant was mentioned for this purpose. As far as 
unsolicited RPPS are concerned, there was no bidding process, 
HRC 7734-G/09 
[RPPs case] 
29 
therefore,  following chart has been prepared regarding solicited 
RPPs:- 
A. 
ICB conducted by PPIB 
Name of RPP 
Site 
specification 
Fuel type/ 
Technology 
Make & 
type of 
machinery 
Reserved 
price 
Karkey  
Not 
provided 
Not specified 
Not 
specified 
Not 
provided 
Gulf 
Rental 
Power 
Not 
provided 
Not specified 
Not 
specified 
Not 
provided 
Independent 
Power 
(Pvt.) 
Ltd. 
Not 
provided 
Not specified 
Not 
specified 
Not 
provided 
Sialkot Rental 
Power 
Not 
provided 
Not specified 
Not 
specified 
Not 
provided 
Reshma 
Power 
Not 
provided 
Not specified 
Not 
specified 
Not 
provided 
Premier 
Energy (Pvt.) 
Ltd. 
Not 
provided 
Not specified 
Not 
specified 
Not 
provided 
Ruba Energy 
Not 
provided 
Not specified 
Not 
specified 
Not 
provided 
Consortium of 
Tapal 
Not 
provided 
Not specified 
Not 
specified 
Not 
provided 
Walters 
Power 
International 
Not 
provided 
Not specified 
Not 
specified 
Not 
provided 
B. 
ICB conducted by PEPCO 
Name of RPP 
Site 
specification 
Fuel type/ 
Technology 
Make & 
type of 
machine
ry 
Reserved 
price 
Techo E. 
Power, 
Sammundri 
Road, 
Faisalabad  
Yes, 
but 
changed 
later on 
Yes 
No 
Not provided 
Techno 
Energy (Pvt.) 
Ltd. Sahuwal, 
Sialkot 
Yes 
Yes 
No 
Not provided 
Guddu 
Yes 
Yes 
No 
Not provided 
Young Gen 
Yes 
Yes 
No 
Not provided 
 
The detail of RPPs regarding payment of advance, COD and present 
status is given below: -  
Name of RPP Advance 
payment 
COD 
Advance 
returned 
or not 
Present 
status 
of 
RPP 
 
 
HRC 7734-G/09 
[RPPs case] 
30 
ICB CONDUCTED BY PPIB 
 
Karkey  
Yes 
Not 
achieved 
within time 
No 
Functioning 
Gulf 
Rental 
Power 
Yes 
Not 
achieved 
within time 
No 
Functioning 
Independent 
Power 
(Pvt.) 
Ltd. 
No 
Not 
achieved 
within time 
---- 
No Machinery 
at site 
Sialkot Rental 
Power 
No 
Not 
achieved 
within time 
---- 
Not 
functioning 
Reshma 
Power 
Yes 
Not 
achieved 
within time 
Yes 
Functioning 
Premier 
Energy (Pvt.) 
Ltd. 
No 
Not 
achieved 
within time 
---- 
Not 
functioning 
RUBA Energy 
No 
Not 
achieved 
within time 
---- 
Not 
functioning 
Consortium of 
Tapal 
No 
Not 
achieved 
within time 
---- 
Not 
functioning 
Walters 
Power 
International 
No 
Not 
achieved 
within time 
---- 
Not 
functioning 
 
ICB CONDUCTED BY PEPCO 
 
Techo E. 
Power, 
Sammundri 
Road, 
Faisalabad  
yes 
Not 
achieved 
within 
time/ 
Partial 
COD 
 
No  
Not 
functioning 
Techno 
Energy (Pvt.) 
Ltd. Sahuwal, 
Sialkot 
yes 
Not 
achieved 
within time 
 
yes 
Not 
functioning/ 
No Machinery 
at site 
Guddu 
yes 
Not 
achieved 
within time 
 
yes 
Not 
functioning 
Young Gen 
yes 
Not 
achieved 
within time 
 
yes 
Not 
functioning 
 
UNSOLICITED 
  
Techo E. 
Power, 
Sammundri 
Road, 
Faisalabad 
(Extension) 
No 
Not 
achieved 
within time 
---- 
Not 
functioning/ 
No Machinery 
at site 
HRC 7734-G/09 
[RPPs case] 
31 
Karkey 
(Extension) 
No 
Not 
achieved 
within time 
---- 
Not 
functioning/ 
No Machinery 
at site 
Naudero-I 
yes 
Not 
achieved 
within time 
 
No  
Functioning 
Naudero-II 
yes 
Not 
achieved 
within time 
 
yes 
Not 
functioning 
Abbas Steel 
Group 
No 
Not 
achieved 
within time 
---- 
Not 
functioning/ 
No Machinery 
at site 
 
Thus, it is held that quoting the reserve price, allocating the sites, 
down payments, etc., were the crucial factors to ensure competitive 
bidding. Since, these were not mentioned in the advertisements, the 
bidding process were rendered questionable. Resultantly, all the 
transactions lacked transparency.  
UNSOLICITED RENTAL POWER PROJECTS  
20. 
 
As per information provided by NEPRA, initially NTDC/CPPA 
approached NEPRA for obtaining license to purchase power from RPPs. 
NEPRA allowed this power purchase arrangement to NTDC/CPPA vide 
letter No. NEPRA/R/PAR-11/CPPA-2006/6213-15 dated 27.07.2006. 
Subsequently, 
NEPRA 
vide 
letter 
No.NEPRA/R/PAR-11/CPPA-
2006/6920-22 dated 09.10.2006 decided to withdraw the power 
acquisition permission granted to CPPA for procurement of power from 
RPPs and advised NPGCL as under: -  
(i) 
NPGCL to file an application for modification in their 
license 
under 
NEPRA’s 
Application 
Modification 
Procedure Regulations 1999.  
(ii) 
NPGCL to execute their PPA with CPPA in respect of 
the current power generation and also include the 
provision of additional power from rented power 
plant.  
(iii) 
NPGCL to file their tariff petition in respect of 
additional generation.  
 
HRC 7734-G/09 
[RPPs case] 
32 
Based on above advice of NEPRA, NPGCL approached NEPRA for 
modification in generation license and signed RSCs, including 
assignment, if any, with the RPPs.  
21. 
 
It has been admitted on behalf of PEPCO and GENCOs that 
phenomenon of rental power projects to overcome the shortage of 
electric power was introduced by the Government for the first time in 
the year 2006, considering it to be a short term measure. Two 
unsolicited rental contracts were executed with M/S Alstom for 136 
MW at Bhikki and M/S General Electric Power for 150 MW at 
Saharanpur respectively. The contract of Bhikki was awarded to 
Alstom, and later on said company assigned it to M/S Pakistan Power 
Resources (PPR) in pursuance of agreement dated 17.01.2007. Details 
of the Bhikki project are as under: -  
“BHIKKI POWER PROJECT 
 
Place: 
 
 
 
Bhikki, District Sheikhupura 
Capacity: 
 
 
 
136MW (gas based) 
Rental term: 
 
 
36 months 
Contract amount:  
 
USD 103,015,476 
Mobilization Advance:  
USD 7,211,083 
Agreement date:  
 
18 September, 2006 
Rental revenue received: 
USD 68,024,477 
Rental revenue loss: 
 
USD 34,990990 
Date of Assignment 
 
17 January, 2007 
Effective Date 
 
 
23 February 2007 
COD Scheduled 
 
 
23 June 2007 
Achieved 
 
 
Unit III 19 December, 2007 
 
 
 
 
 
Unit II 22 January 2008 
 
 
 
 
 
[Unit I 02 April 2008] 
Expiry of Agreement: 
 
22 June 2010” 
22. 
 
It is stated that the Bhikki and Sharaqpur RPPs were 
approved by the ECC on 16.08.2006, which perhaps is not correct 
statement of fact because ECC examined the matter vide case No.ECC-
135/9/2006 dated 16.08.2006 in respect of 150 MW power plant at 
Piranghaib, Multan on rental basis and decided as under: -  
Case No.ECC-135/9/2006 
Dated: 16.08.2006 
150 
MW 
POWER 
PLANT 
AT 
PIRANGHAIB MULTAN ON RENTAL 
HRC 7734-G/09 
[RPPs case] 
33 
BASIS 
 
 
DECISION 
The Economic Coordination Committee (ECC) of the Cabinet 
considered the summary dated 12th August 2006, submitted by the 
Ministry of Water and Power on “150 MW Power Plant at 
Piranghaib Multan on Rental Basis” and approved the proposals at 
para 6 and 8 of the Summary. 
The above decision was considered and approved by the Cabinet on 
26.08.2006 and was conveyed by the Ministry of Water & Power, 
Government of Pakistan to Chairman WAPDA, Lahore vide letter 
No.PL-9(3)/2006.  
23. 
 
It may be noted that NPGCL sought permission from 
NEPRA to enter into rental arrangements for three years commencing 
from 100 days of the signing of contract between the parties for 
enhancing installed generating capacity by 150 MW at Sharaqpur and 
136 MW at Bhikki and further specified the rates of sale of electricity. 
The NEPRA recorded its decision dated 15.12.2006 in Case 
No.NEPRA/TRF-63/NPGCL-2006/7951-53, 
which 
is 
reproduced 
hereinbelow in extenso: -  
“Subject: Decision of the Authority w.r.t. Tariff Petition 
filed by Northern Power Generation Company 
Ltd. (NPGCL) for Determination of Tariff for 
Power 
Plants 
on 
Rental 
Basis 
from 
GE 
Energy/Alstom 
Power 
(Case 
No.NEPRA/TRF-
63/NPGCL-2006)- Intimation of Decision of Tariff 
pursuant to Section 31(4) of the Regulation of 
Generation, Transmission and Distribution of 
Electric Power Act (XL of 1997) 
Dear Sir, 
Please find enclosed the decision of the Authority (4 
pages) in Case No.NEPRA/TRF-63/NPGCL-2006. 
2. 
The determination is being intimated to the Federal 
Government for the purpose of notification of Generation, 
Transmission and Distribution of Electric Power Act (XL of 
1997) and Rule 16(11) of the National Electric Power 
Regulatory Authority Tariff (Standards and Procedure) 
Rules, 1998. 
3. 
Please note that only Order of the Authority at para 
9 of the determination relating to the Reference Tariff and 
allowed adjustments & indexation needs to be notified in 
the official gazette. The Order is reproduced for the 
purpose of clarity and is attached herewith. 
HRC 7734-G/09 
[RPPs case] 
34 
DA/AS above. 
Sd/- 15.12.2006 
(Mahjoob Ahmad Mirza)” 
 
Keeping in mind the fact that in respect of Rental Power Projects, 
subsequent to issuance of guidelines, the NEPRA was practically made 
ineffective to determine the electric charges as it was directed to 
follow Paragraphs 1.9 and 1.10 of the Guidelines issued by the Federal 
Government in the year 2005 in respect of IPPs. As far as question of 
determination of tariff is concerned, it was noted in a summary put up 
to the ECC on 07.02.2008 that efforts be made that the tariff of the 
RPPs is in line with the tariff determined in respect of the IPPs based 
on similar technology for their first 10 years, but it appears that the 
tariff of the RPPs was much higher than that of the IPPs. The aforesaid 
Paragraphs are reproduced hereinbelow: -   
“1.9 Tariff through competitive process 
The bidding process may be structured on either of 
the following two options; 
 
a) 
bidding for a tariff 
b) 
Offering an up-front benchmark tariff and 
bidders to quote a discount on the benchmark 
price. 
 
1.10 It is proposed that once a tariff has been arrived at 
through competitive biddings based on either of the 
processes mentioned at Para 1.9 above, the bidding 
process be structured and administered by PPIB 
(Ministry of Water and Power) in consultation with 
the power purchaser (WAPDA/NTDC), Ministry of 
Finance 
and 
NEPRA. 
The 
bidding 
documents 
(including various formula, formats, etc.) along with 
evaluation criteria, be also finalized by PPIB in 
consultation with the same agencies. The lowest 
evaluated levelized tariff would be recommended to 
the GOP for acceptance.”  
24. 
  
Despite restriction on determining the tariff by NEPRA, as 
it has been noted hereinabove, fuel cost charge of Rs.2.7194 per kWh 
delivered at Inter connection Bas bar in respect of Sharaqpur as well 
as Bhikki was determined. As per above calculation, the Government 
HRC 7734-G/09 
[RPPs case] 
35 
had already paid approximately US $ 2.161 million (Rs.18.63 billion) 
to these two RPPs as capacity and fuel charges. Thus, NPGCL (GENCO-
III) suffered huge losses in the years 2007, 2008 and 2009, with 
regard to the RPPs in Block-I and Block-II, details whereof are given 
hereinbelow: -  
 
Annex-3 
NORTHERN POWER GENERATION COMPANY LIMITED (GENCO-III) 
Financial Impact on Account of CCP Tariff Determined Vs CPP Tariff 
Demanded 
CALCULATION OF CAPACITY 
CHARGE 
2007 
2008 
2009 
Dependable Capacity (MW) 
261.46 
261.46 
261.46 
Capacity Purchase Price 
Escalable Component: 
Fixed O&M Cost: 
 
 
 
 
 
 
 
____Mln. Rs.____ 
Rent for Rented Block-I 
2,272.40 
2,272.40 
2,272.40 
Rent for Rented Block-II 
2,060.31 
2,060.31 
2,060.31 
Guaranteed Heat Rate Bonus 
261.54 
261.54 
261.54 
Gas Pipelines Installations 
83.12 
- 
- 
General Establishment Cost 
3.50 
3.68 
3.86 
Administrative Cost 
100.00 
100.00 
100.00 
M&I/Overhauls 
- 
- 
- 
MEPRA Fees 
8.50 
2.30 
2.30 
Insurance 
- 
- 
- 
Depreciation (for ROA) 
- 
- 
- 
Duties etc. 
442.00 
- 
- 
Total Fixed O&M Cost 
5,231.3670 4,700.2240 
4,700.4078 
 
 
 
 
CPP-FOM charge (Rs./kW/Month) 
1,667.3318 1,498.0469 
1,498.1055 
CPP Determined By NEPRA 
(Rs./kW/Month) 
1,283.4851 1,283.4851 
1,283.4851 
CPP Tariff Difference 
(Rs./kW/Month) 
383.8467 
214.5618 
214.6204 
Projected Loss per Month due to 
less CPP Tariff Determined (Mln 
Rs) 
100.3621 
56.1002 
56.1155 
Projected Loss per Year due to 
less CPP Tariff Determined (Mln 
Rs) 
1,204.3452 
673.2022 
673.3860 
 
 
25. 
 
It is also to be noted that as the natural gas was to be 
used for both these RPPs as the fuel and availability factors of both the 
plants were 92% and both the projects i.e. GE-Sharaqpur 150 MW and 
Alstom-Bhikki 136 MW, NPGCL generated (MKWH) 1515 and 816 
respectively on account of plant factor average 39% and 26% 
HRC 7734-G/09 
[RPPs case] 
36 
comparing to availability factor 92%. Similarly, above facts and figures 
show financial impact on account of CPP tariff determined by NEPRA 
(Rs./kW/Month) and CPP-FOM charge (Rs./kW/Month). The availability 
factor 
efficiency 
is 
fully 
evident 
from 
the 
chart 
reproduced 
hereinabove. In a nutshell, due to tariff determination by the NEPRA 
according to the available formula, considerable losses occurred to 
NPGCL. Therefore, while going for further RPPs, the concerned 
authorities ought to have taken into consideration that since these two 
projects had already caused losses to the public exchequer, therefore, 
it was not advisable to opt for generating electric power through RPPs.  
26. 
 
Raja Parvez Ashraf has placed on record a copy of 
summary of ECC dated 17.08.2009 wherein it is stated that the 
Ministry of Water & Power received a few unsolicited proposals offering 
a reasonable tariff, which were compatible with the average RPPs’ 
tariffs received through ICBs and compliant with the ECC guidelines. 
The efficiency and available standards for these power plants and the 
financial models also matched the ICB projects. The detail of the 
unsolicited proposals, attached with the said summary, is given 
hereinbelow: -  
Sr. 
No. 
Description 
of project 
Fuel 
Capacity 
(MW) 
Rental 
Charges 
demanded 
by Sponsor 
Cents/kwh 
Proposed 
Rental 
Charges 
Cents/kwh 
Remarks 
1 
 
Naudero-I 
 
Gas 
 
50 
 
4.46 
 
4.46 
2 
 
Naudero-II 
 
Gas 
 
51 
 
4.46 
 
4.00 
 Phase I financing 
arranged and 
project already 
inaugurated by the 
President.  
 Hard Area. 
 Medium size plant. 
 Overall Tariff 
lesser as 
compared to RFO 
plants in the ICB 
mode. 
3 
Sammundri 
Road 
RFO 
150 
3.90 
3.75 
 Phase I being 
completed on 
HRC 7734-G/09 
[RPPs case] 
37 
Extension 
30.9.2009. 
 Proximately to load 
centre and 
economy of size. 
4 
Karkey 
upgradation 
RFO 
222 
5.98 
5.60 
 Higher Project cost 
being power ship/ 
barge mounted 
and different 
technology.  
 Very relevant for 
Karachi 
 
The Minister authorized the Secretary (Mr. Shahid Rafi) to submit the 
summary, which sought approval of the ECC as under: -  
(i) 
Payment of 14% mobilization to IPP and GoP 
sovereign guarantee as proposed at para-4 ante (not 
relevant as far as the case in hand is concerned). 
(ii) 
Installation of 473 MW of unsolicited projects as 
proposed at Para-5 ante.  
 
In respect of Naudero-II, noted hereinabove, a petition for tariff 
determination was filed by the CPGCL before NEPRA on 20.04.2010. 
The NEPRA considered that the petitioner was guilty of non-compliance 
of its directions, inasmuch as plant machinery was shifted from Guddu 
to Naudero without prior approval of the Authority; the generation 
tariff of RPP at Guddu was determined on lower side, while higher tariff 
was claimed on the same machinery to be installed at Naudero; 
advance payment had already been made against Guddu, which was 
not returned; and again advance payment of 14% was made on 
06.04.2010 against proposed new Naudero-II for the same machinery. 
Therefore, the petition was declined by NEPRA.  
27. 
 
Naudero-II was sponsored by Walters Power International, 
whereas Guddu Rental Power Project was sponsored by Pakistan Power 
Resources, which had not so far been signed off. During the hearing of 
the case, it was noticed that the total rental value in respect of Guddu 
plant was determined at US$ 72.48 million against which 14% down 
payment equal to US$ 10.15 million, 7% on 17.03.2008 and 7% on 
HRC 7734-G/09 
[RPPs case] 
38 
12.03.2009 had been made. But, when the plant was shifted from 
Guddu to Naudero, again for the second time 14% advance payment 
was made on 06.04.2010 to M/S Walters Power International. Prima 
facie, it is a criminal act of extracting money from GENCOs on one 
pretext or the other, otherwise knowing well that Pakistan Power 
Resources had already obtained 14% advance payment, therefore, in 
all fairness, the GENCOs’ authorities ought to have pointed out in clear 
terms that as the said plant was not being installed at Guddu, 
therefore, the advance payment of 14% ought to be returned. Be that 
as it may, this Court, taking notice of this aspect of the matter, vide 
order dated 08.12.2010 directed as under: -  
“In response to order of this Court dated 07.12.2010 final 
statements have been made on behalf of Pakistan Resources 
(P.P.R.) and Walters Power International. The documents being 
the negotiable instruments have been filed for effecting the 
recovery of the outstanding 
amount mentioned in the 
statements. Learned counsel states that amount mentioned in 
the above statement has been arranged and shall be returned to 
Central Power General Company Ltd. During course of the day. 
It is to be noted that according to learned counsel, the original 
amounts have been paid by both the companies along with 
markup upto date i.e. 08.12.2010. 
2. 
Mr. Abdul Malik Memon, C.E.O. of the GENCO is present 
and he is required to conduct an inquiry/probe and submit a 
report on the next date of hearing fixing responsibility upon the 
officers/officials or the persons on whose instructions GENCO 
agreed to make the payment to both the companies without 
keeping facts and circumstances of the case in front of them.” 
 
However, the requisite report after fixing responsibility upon the 
concerned persons was not submitted.  
28. 
 
As far as unsolicited RPP of Techno E. Power, Sammundri 
Road, Faisalabad is concerned, the same was allowed to continue in 
view of the recommendations made in ADB’s report. As the machinery 
HRC 7734-G/09 
[RPPs case] 
39 
of Karkay-II (extension) was not brought at site and when NEPRA 
proposed to take action because of non-achieving of COD, it was 
informed that basically this project of 222 MW was to be installed at 
Korangi, Karachi. Since the sponsor did not respond, therefore, neither 
LOA was issued nor any RSC was signed. It may also be noted that 
there was yet another unsolicited RPP known as Abbas Steel Group 
and as there was no machinery at site and as no response was given 
by the sponsor to the GENCO, therefore, LOA was not issued. The 
advance payment in respect of Naudero-II sponsored by Walters 
Power International had been recovered whereas no advance payment 
had been made to Karkey-II as well as Abbas Steel Group. 
29. 
 
As far as Naudero-I is concerned, it is sponsored by Walter 
Power International for a 5-year rental term, the location of the project 
is in Sindh, its capacity is 51 MW, rental value has been determined at 
US$ 80.42 million and 14% advance payment equal to US$ 11.26 
million was made on 16.11.2009. This project could not achieve COD, 
therefore, GENCO (CPGCL) encashed the performance guarantee of 
US$ 255,000.  
30. 
 
Khawaja Muhammad Asif vehemently contended that the 
unsolicited RPPs were awarded without adhering to the PPRA Rules. 
The In-charge Minister of WAPDA and the Secretary, who had agreed 
to accept the offer of the sponsors to allow them to generate electricity 
without following rules in the year 2006 and subsequent thereto had 
acted without jurisdiction and illegally and caused loss to the public 
exchequer. Since the object for which the RPPs were allowed to be 
installed was not achieved, therefore, not only the concerned 
authorities who re-negotiated terms with them, but at the same time 
the functionaries including the Ministers and others, who had allowed 
HRC 7734-G/09 
[RPPs case] 
40 
advance payments ought to be dealt with in accordance with the law 
and the amounts be recovered from them with mark-up.   
31. 
 
Raja Parvez Ashraf, former Minister and his counsel Mr. 
Wasim Sajjad, learned Sr. ASC admitted that during his tenure, 
Naudero-I was installed pursuant to an unsolicited proposal in view of 
the decision of ECC. He, however, explained that although procedure 
of ICB was not followed, but complete evaluation of the project and its 
technical and financial parameters on cost-plus basis were examined, 
inasmuch as the NEPRA had determined tariff under section 7 of the 
Act, 1997. Khawaja Ahmad Tariq Rahim, learned counsel supported 
the contention raised by Mr. Wasim Sajjad, learned Sr. ASC on behalf 
of former Minister.  
32. 
 
Mr. Shahid Hamid contended that the Authority had 
decided in the first week of September, 2010 to sign off Guddu Power 
Project. In the meantime, machinery had been imported, therefore, on 
the request of WPI and PPR, this machinery was shifted to Naudero for 
installation at WPI’s Naudero-II with permission of CPGCL. The sponsor 
had offered to determine some reasonable rental rate, but such 
request was turned down unlawfully. The WPI in good faith made offer 
to install the machinery at Naudero-II within a period of six months 
without receiving any payment till the COD was achieved. When the 
review petition filed by GENCOs (CPGCL) was declined by NEPRA vide 
order dated 10.03.2011 on the ground that the machinery was more 
than 10 years old, WPI offered to install absolutely new machinery at 
Naudero-II Project and also proposed revised amended contract with 
CPGCL with no advance till COD was achieved and installation of new 
machinery, to be purchased by WPI from GEP in Austria. As far as 
acceptance of unsolicited proposal for Naudero-I is concerned, he 
HRC 7734-G/09 
[RPPs case] 
41 
contended that in view of the facts and circumstances, PEPRA Rule 
42(c) permits direct contracting without adhering to follow the rules of 
ICB, etc.  
33. 
 
Dr. Parvez Hassan, learned ASC appeared for Pakistan 
Power Resources and argued that all the unsolicited proposals for RPPs 
like Bhikki, Sharaqpur and Naudero-I are covered under Rule 42(3), 
particularly, in view of the fact that NEPRA was authorized to 
determine the rental value strictly in accordance with section 7, and 
for such reason, no prejudice was likely to be caused to the general 
public. Thus, legally it would be presumed that all unsolicited proposals 
were transparent and in accordance with the Rules. Guddu Power 
Project was awarded on the basis of ICB to the PPR. There were 
certain defaults on the part of the CPGCL under the rental services 
contract, thus liability for achieving COD entirely lies on CPGCL/NEPRA. 
As gas to be used for the project was not available, therefore, it was 
decided that the project should be signed off. Although the advance 
payment has been returned, but to settle other disputes, a mediator 
has been appointed. He categorically denied the allegations of 
corruption and undue influence in obtaining the unsolicited RPPs. He 
stated that the allegations made in this behalf by Mr. Faisal Saleh 
Hayat and Khawaja Asif are false, frivolous, scandalous, vexatious and 
mala fide.  
34. 
 
We have considered the arguments put forward by the 
learned counsel for the parties. As it has been pointed out time and 
again, with a view to achieving the goal of transparency in awarding 
contract or in making procurement, open competition is prerequisite 
under the PPRA Rules. The justification put forward by Mr. Wasim 
Sajjad, Sr. ASC in his arguments noted hereinabove is that as the 
HRC 7734-G/09 
[RPPs case] 
42 
decisions have been taken by the ECC for awarding contract without 
following the PPRA Rules, therefore, no mala fide or element of 
corruption can be attributed to the parties to the contracts or to the 
official functionaries. Suffice it to say, that since the ECC enjoys 
Constitutional status, one of its functions is to review from time to 
time the energy requirements, its effects and production and 
investment. Essentially, ECC is bound to act in accordance with the law 
of the land and the Rules. Thus, in presence of PEPRA Rules, it was 
incumbent upon the Minister and the Secretary, Water and Power as 
well as other functionaries not to have put up such a case before the 
ECC in violation of the PEPRA rules. In the summary dated 17.3.2009, 
it has not been mentioned that without following PEPRA rules, 
unsolicited projects cannot be allowed. However, Mr. Shahid Hamid 
stated that such procurement is covered under Rule 42(c) of the PPRA 
Rules, which is reproduced hereinbelow: 
“42. Alternative methods of procurements.- 
A procuring 
agency may utilize the following alternative methods of 
procurement of goods, services and works, namely:-  
………………………………………………… 
(c) 
direct contracting.-  A procuring agency shall only 
engage in direct contracting if the following conditions 
exist, namely:-  
(i) 
the procurement concerns the acquisition of spare 
parts 
or 
supplementary 
services 
from 
original 
manufacturer or supplier:  
Provided that the same are not available from 
alternative sources;  
(ii) 
only one manufacturer or supplier exists for the 
required  procurement:  
Provided that the procuring agencies shall specify the 
appropriate fora, which may authorize procurement 
of proprietary object after due diligence; and  
(iii) 
where a change of supplier would oblige the 
procuring agency to acquire material having different 
technical specifications or characteristics and would 
HRC 7734-G/09 
[RPPs case] 
43 
result in incompatibility or disproportionate technical 
difficulties in operation and maintenance:  
Provided that the contract or contracts do not exceed 
three years in duration;  
(iv) 
repeat orders not exceeding fifteen per cent of the 
original procurement;  
(v) 
in case of an emergency:  
Provided that the procuring agencies shall specify 
appropriate fora vested with necessary authority to 
declare an emergency;  
(vi) 
when the price of goods, services or works is fixed 
by the government or any other authority, agency or 
body duly authorized by the Government, on its 
behalf, and  
(vii) for purchase of motor vehicle from local original 
manufacturers 
or 
their 
authorized 
agents 
at 
manufacturer’s price.”  
35.   
A perusal of the above rule suggests that the provision for 
direct procurement without following procedure of fair competition was 
not applicable in the case of unsolicited proposal for RPPs. As far as 
the claim of learned counsel justifying the shifting of machinery from 
Guddu to Naudero is concerned, no document/material has been 
placed on record to indicate that permission for the same was granted. 
Similarly, with regard to other unsolicited proposals for RPPs, no 
material has been brought on record to canvass that there was no 
mala fide. Therefore, having been left with no option except to believe 
the arguments raised by Makhdoom Syed Faisal Saleh Hayat and 
Khawaja Muhammad Asif that on account of such unsolicited 
proposals, PEPCO and the concerned GENCOs had indulged in 
corruption.  
ROLE OF NEPRA 
36. 
 
The object and purpose of introducing NEPRA was to 
regulate the provision of electric power services and to determine 
tariff, rates, charges and other terms and conditions for supply of 
HRC 7734-G/09 
[RPPs case] 
44 
electric 
power 
services 
by 
the 
generation, 
transmission 
and 
distribution as per section 7 of the Act, 1997, which has been 
reproduced in the preceding paragraphs. However, neither the process 
was undertaken with due diligence nor the policy already in vogue 
since 2006 onwards introduced by the previous Government for 
running power plants to cater the requirements of shortage of 
electricity was followed.  
37. 
 
It may be observed here that the NEPRA did not play its 
due role in the process of RPPs, firstly for the reason, that bids were 
invited on the basis of reference tariff of the fuel; secondly, the NEPRA 
was directed to follow the guidelines already issued in respect of IPPs 
(guidelines 1.9 and 1.10), which have already been reproduced 
hereinabove, but in our opinion NEPRA being an independent 
regulatory body had to perform its functions according to law. As per 
prescribed procedure, NEPRA could not be oblivious of its duty of 
determining tariff in accordance with the mandatory provisions of the 
Act, 1997. It may be noted that as per section 7(3)(a) of the Act, 
1997, NEPRA is exclusively responsible for determining tariff, rates, 
charges and other terms and conditions for supply of electric power 
services by the generation, transmission and distribution companies 
and recommend to the Federal Government for notification. One of the 
most important aspects of the case is that under section 7(6) of the 
Act, 1997, the NEPRA is mandated to protect the interests of 
consumers and companies providing electric power services in 
accordance with the guidelines, not inconsistent with the provisions of 
the Act, laid down by the Federal Government. Therefore, the NEPRA 
cannot close its eyes and determine tariff contrary to the provisions of 
the Act, 1997. Not only that, under section 31 of the Act, 1997 and 
HRC 7734-G/09 
[RPPs case] 
45 
Rule 17(2) of the National Electric Power Regulatory Authority (Tariff 
Standards and Procedure) Rules, 1998, the NEPRA is required to lay 
down procedures and standards for the purpose of determination of 
tariff. One of the objects thereof is that the Authority should allow 
preference for competition rather than regulation and adopt policy for 
tariff determination in terms of rule 17(2) & (6) of the NEPRA Rules. 
The NEPRA has not adopted the aforesaid procedures and standards in 
the matter of RPPs. In the circumstances, it can only be inferred that 
the NEPRA has been inoperative and inactive as far as RPPS are 
concerned. When we inquired from the learned counsel as to why the 
NEPRA has not asserted its decision in discharge of function assigned 
to it, he had no satisfactory answer other than stating that in some of 
the cases including the unsolicited projects, the NEPRA has followed 
the said procedures and standards in determining tariff. We are not 
satisfied with the arguments so advanced by him because the data 
noted hereinabove indicates that in the case of Naudero-I, which was 
an unsolicited project, apparently rates of electricity were determined 
on the higher side. However, it might not be possible for the NEPRA to 
discharge its functions because of the instructions and interference by 
the Ministry of Water & Power, which had been issuing instructions 
from time to time, but in any case, instead of following mandatory 
provisions of the Act, 1997, the NEPRA ought not to have 
compromised its position.  
38. 
 
Mr. Kamal Anwar, ASC assisted the Court as Amicus 
Curiae. He submitted that advance payment was made to 9 RPPs, 
namely, Karkey, Gulf Rental Power, Reshma Power, Techo Sammundri 
Road Faisalabad, Techno Sahuwal Sialkot, Guddu, Young Gen, 
Naudero-I 
and 
Naudero-II, 
details 
whereof 
have 
been 
given 
HRC 7734-G/09 
[RPPs case] 
46 
hereinabove. None of them could achieve COD within time, on account 
of which their contracts were signed off. Statedly, the bank guarantees 
furnished on behalf of all the bidders have also been encashed. Out of 
said RPPs, the advance payment was returned by Reshma, Techo 
Sammundri Road Faisalabad, Techno Sahuwal Sialkot, Guddu, Young 
Gen and Naudero-II. However, Karkey (231.8 MW), Gulf (62 MW), 
Naudero-I (51 MW) and Reshma (201 MW), which are still functioning, 
had achieved delayed COD. Mr. Muhammad Akram Sheikh, learned 
counsel for Karkey contended that Karkay is the only foreign company 
of brotherly country Turkey, which had invested in this country, but 
when we inquired from him as to why favour was shown to the bidder 
by making 7% advance payment prior to the decision of the Cabinet, 
he had no answer.  
 
 
Similarly, learned counsel appearing for Karkey could not 
answer regarding the non-achieving of COD in time. He stated that on 
account of force majeure, barge-mounted ship could not reach Karachi 
within time. Without prejudice to the case so put up by the learned 
counsel, we may point out that we do have respect for the brotherly 
country, but as far as commercial activities between any bidder and 
the Government owned companies are concerned, the matter is to be 
examined strictly in the light of the relevant provisions of the 
Constitution and the law. No plausible evidence has been brought on 
record to substantiate the plea. In addition to it, the case of Karkay 
also suffers from the irregularities and illegalities, which have been 
noted in respect of all other cases. We, therefore, hold that the 
contract was awarded to Karkey in a non-transparent manner.  
39. 
 
In all, 19 Rental Power Projects, namely, Pakistan Power 
Resources, Guddu; Pakistan Power Resources, Piranghaib, Multan; 
HRC 7734-G/09 
[RPPs case] 
47 
Techno, Sammundri Road, Faisalabad; Techno Project, Sahuwal, 
Sialkot; Young Gen, Faisalabad; Gulf Rental Power, Gujranwala; 
Independent 
Power 
Limited; 
Kamoki 
Energy 
Limited; 
Karkey 
Karadeniz, Karachi (Karakey-I); Premier Energy; Reshma Power 
Generation, Manga-Raiwind Road; Ruba Power Generation, Manga-
Raiwind Road; Sialkot Rental Power, Eminabad; Walter Power 
International, Karachi; Abbas Steel; Karkey Karadeniz, Karachi 
(Karkey II); Techno-E-Power (Pvt.) Limited, Sammundri Road, 
Faisalabad-II; Walter Power International, Naudero-I; and Walters 
Power International, Naudero-II were proposed.  
REPORT OF AUDITOR GENERAL 
 
40. 
 
The Auditor General of Pakistan, in the Audit Report on the 
Accounts of Water and Power Development Authority for the Audit 
Year 2009-2010 observed a number of illegalities and irregularities, 
including pointing out that ECC in its decision bearing No.121/15/2009 
approved the following four unsolicited projects: -  
Sr.No. 
Description of 
Project 
Fuel 
Capacity 
Rental charges 
demanded 
by 
sponsor 
Cents/kwh 
Proposed 
rental 
charges 
cents/kWh 
1 
Naudero-I 
Gas 
50 M.W 
4.46 
4.46 
2 
Naudero-II 
Gas 
51 M.W 
4.46 
4.00 
3 
Sammundri 
Road 
Extension 
RFO 
150 M.W 
3.90 
3.75 
4 
Karkey Up-
gradation 
RFO 
222 M.W 
5.98 
5.80 
 
These projects were required to obtain approval of their proposed tariff 
from NEPRA within minimum period prescribed.  
THIRD PARTY EVALUATION BY ADB 
41. 
 
Admittedly, report was submitted by ADB wherein the 
process of awarding contracts to supply the electric power to the 
sellers, 
partially 
was 
not 
found 
transparent. 
Therefore, 
the 
Government of Pakistan, through Ministry of Water and Power 
HRC 7734-G/09 
[RPPs case] 
48 
accepted this report, which means accepting the omissions and 
commissions, irregularities, illegalities, and negligence both civil and 
criminal, committed during the process of award of RPPs at different 
points of time. Thus, in view of objection of ADB, to whom the 
Government itself appointed for the purpose of third party evaluation, 
8 RPPs (1257 MW) were ordered to be vigorously pursued and 6 RPPs 
were ordered to be reviewed in the light of the legal provisions before 
proceeding further, whereas 5 RPPs not yet approved/signed were 
ordered to be discontinued vide order dated 27.01.2010. The said 19 
projects were reduced to 9 projects as per decision of the ECC/Cabinet 
in the light of the ADB report, detail of which, as per the report of 
Asian Development Bank (ADB) is as follows: -  
Rental Power Project Status 
 
No. 
RPP Name 
Net 
Capacity 
(MW) 
Fuel 
Type 
Rental 
Period 
(Months)
Rental 
Tariff at 
60% Plant 
Factor 
(Cents/ 
kWh) 
Estimated 
COD 
Down 
Payment 
Disbursed 
Contracts 
status 
 
PEPCO ICB Projects 
 
1 
Pakistan Power 
Resources, 
Guddu 
110 
Low 
BTU 
gas 
36 
8.44 
10-Feb 
14% 
Effective 
2 
Techno Rental 
Power Project-I, 
Sammundri, 
Faisalabad 
150 
RFO 
36 
18.64 
10-Jun 
14% 
Effective 
3 
Techno Rental 
Power Project-II, 
Sahuwal, Sialkot 
150 
RFO 
48 
18.7 
10-Jun 
7% 
Effective 
4 
Young Gen 
Power, 
Faisalabad 
200 
RFO 
36 
15.59 
10-Jun 
14% 
Effective 
 
PPIB ICB Projects 
 
5 
Gulf Rental 
Power, 
Gujranwala 
62 
RFO 
60 
17.82 
10-Feb 
14% 
Effective 
6 
Karkey 
Karadeniz, 
Karachi 
(Karakey 1) 
232 
RFO 
60 
22.36 
10-Apr 
14.16% 
Effective 
7 
Reshma Power 
Generation, 
Manga-Raiwind 
Road 
201 
RFO 
60 
20.26 
10-Mar 
14% 
Effective 
 
Unsolicited Projects 
 
 
8 
Walter Power 
International, 
51 
Gas 
60 
9.5 
10-Jun 
14% 
Effective 
HRC 7734-G/09 
[RPPs case] 
49 
Naudero-I 
9 
Walters Power 
International, 
Naudero-II 
50 
Gas 
60 
 
10-Jun 
NIL 
Under 
Process 
 
The petitioners have vehemently contended that the process of award 
of RPPs contracts was fraught with grave illegalities and irregularities 
whereas the learned counsel appearing for the Government/ 
WAPDA/GENCOs 
have 
submitted 
that 
the 
GENCOs 
had 
been 
implementing the policies of Government to overcome the load-
shedding in the country on fast track basis as per approval of ECC as 
well as the Federal Cabinet. In this regard, a detailed analysis of some 
of the RPPs is undertaken hereinafter.   
SOLICITED RPPs 
DISCUSSION OF EFFECTIVE RPPs 
(1)  GUDDU 
42. 
 
With regard to 110 MW Guddu Rental Power Plant, 
advertisement dated 07.07.2007 was floated. The eligibility criteria 
provided in the advertisement were having similar experience for 
minimum of 3 locations and net worth of not less than US$ 30 M (for 
last 3 years). M/s Pakistan Power Resources (PPR) and M/s Progas 
Pakistan Ltd. (PPL) offered tenders/bids. Both the bidders failed to 
meet US$ 30 million net worth criterion. As such, the PEPCO, vide 
letter dated 03.11.2007, rejected the same and ordered for re-
advertisement. The fresh advertisement was published on 11.11.2007, 
wherein following deviations from first advertisement were made: -   
(1) 
Capacity of 100 MW was changed to 100-125 MW 
with minimum efficiency of 33%.  
(2) 
Period 2 years was changed to 2, 3 or more.  
(3) 
Eligibility condition of having similar experience for 
minimum of 3 locations was removed.  
(4) 
Condition of depositing Security of Rs. 10 M or $ 
0.17 M, was deleted.  
HRC 7734-G/09 
[RPPs case] 
50 
(5) 
Condition of Penalties for non-availability, delay in 
installation & commissioning or variation in heat 
rate, was deleted.  
(6) 
Condition of providing Operational Guarantee worth 
10% of Base Load Operation Cost for 2 years by the 
bidder was deleted.  
(7) 
Process of price evaluation was changed.  
(8) 
Bidder’s responsibility to the extent of Operation and 
Maintenance of equipment and Trouble free base 
load supply of electricity was eliminated.  
(9) 
Bidder’s responsibility to the extent of Transportation 
of equipment to and from the site was eliminated. 
(10) Guarantee for providing 92% of gas fuel was 
provided. 
 
Subsequently, by a corrigendum/advertisement, the condition of 
security deposit of Rs.10 million or US$ 0.17 million was inserted in 
the 
advertisement 
dated 
11.11.2007, 
and 
by 
yet 
another 
corrigendum/advertisement dated 30.11.2007, the bid opening date 
was changed from 01.12.2007 to 10.12.2007. Pursuant to the above 
advertisements, 12 parties made requests for supply of sample 
agreement, however, following three parties tendered their bids: -  
(a)  M/s Progas Pakistan Ltd.,  
(b)  M/s Pakistan Power Resources, and  
(c)  
M/s Pak Oman Investment Company Karachi.  
 
The Evaluation Committee, through its report dated 01.01.2008, gave 
the following recommendations: -  
 On the basis of evaluation criteria, the bid offered by 
M/s Progas Pakistan Ltd. as Option-I (125 MV) is lowest 
in tariff, on the basis of Lump sum Contract Price, 
Rental Charges and Fuel Cost Component.  
 Only M/s Pak Oman Investment Company qualifies the 
minimum US$ 30 million Net Worth, while others do 
not. 
 M/s Progas has offered 125 MW at reduced load 
operation, with other option of 135 MW at full load 
offering an incentive in Rental Rates.  
 Rental Service Contract may be awarded to M/s Progas 
Pakistan Ltd. for installation of 135 MW net capacity on 
three rental years against their guaranteed availability 
at 92% on gas fuel at proposed site of TPS Guddu at 
132 KV level.  
 In this connection, it is proposed to relax minimum 
criteria of US$ 30 million Net Worth.  
 
HRC 7734-G/09 
[RPPs case] 
51 
The bid offered by M/s Pakistan Power Resources was accepted on 
03.02.2008 as under: -  
 Based on rental charges & guaranteed heat rates 
offered by the bidders, the overall cost (US Cents 7.640 
per kWh) offered by M/s Pakistan Power Resources is 
lower as compared to the offer (US Cents 7.974 per 
kWh) of the next higher bidder.  
 The rental value offered by M/s Pakistan Power 
Resources, at (US 2.717 per kWh) was 13%, which was 
lower than that of the rental (US Cents 3.133 per kWh) 
for units of GE at Sheikhupura and PPR at Bhikki, 
already in operation. 
 A penalty clause be included in the contract agreement 
to 
penalize 
PPR 
for 
failing 
to 
achieve 
the 
specified/required COD. 
 It was unanimously agreed that offer by M/s Pakistan 
Power 
Resources 
was 
the 
best 
offer 
and 
was 
accordingly approved. LOA may be issued and the 
matter submitted to PEPCO, BOD for ratification.  
 
Vide letter dated 06.08.2008, the offer of M/s PPR for setting up of 
150 MW Rental Power Station was accepted and Advance Payment 
Guarantees were provided to the seller. Vide letter dated 11.03.2008 
permission was accorded to M/s Pakistan Power Resources, LLC to 
enlarge/expand and continue operation of its Branch Office at Lahore. 
On 23.02.2008, rental agreement was executed between Pakistan 
Power Resources, LLC and Central Power Generation Company Ltd. 
(CPGCL). On 11.12.2008, an amendment was made to the Rental 
Agreement to the following effect: -  
 Changes were made in the mode of payment through 
LC. 
 The CPGCL have no right to cancel the contract within 
initial 8 months. 
 In case of termination of the agreement by CPGCL, the 
buyer shall be entitled to outstanding rent of 36 
months. 
 Maximum drawdown on SBLC during any one calendar 
month will not exceed a sum of US$ 1,872,466.  
 
On 05.03.2009, second amendment was made to the Rental 
Agreement to the whereby following effect: -  
HRC 7734-G/09 
[RPPs case] 
52 
 Requirement of confirmation of SBLC by a Financial 
Institution in UK or USA in terms of clause 4.5(d) was 
waived.  
 The seller waived the right to call the SBLC on account 
of defaults of the Buyer, which had occurred prior to 
issuance of SBLC.  
 Amount of SBLC as mentioned in section 4.5 was 
reduced from 93% (US$ 67,408,766) to 86% (US$ 
62,334,988) of the contract price.  
 Down payment was increased from 7% to 14 %.  
 Some 
amendments 
were 
made 
in 
the 
capacity/operation of Units.  
 
 
(2)  PIRANGHAIB, MULTAN & SAHUWAL, SIALKOT 
 
43. 
 
For setting up a 250-300 MW RPP at Piranghaib, Multan on 
base load operation for 2 years, advertisement was published on 
11.10.2007. The eligibility criteria provided in the advertisement were 
having similar experience for minimum of 3 locations; and Net worth 
of not less than US$ 30 M (for last 3 years). By corrigendum dated 
24.10.2007, the eligibility criterion requiring experience of providing 
similar Rental Power facilities for minimum of three locations was 
deleted. Later on, another corrigendum dated 29.10.2007 was issued 
whereby bid submission/tender opening date was extended to 
07.11.2007. The tenders were opened on 22.11.2007 wherein three 
parties, namely, M/s Techno Engineering (Pvt.) Ltd., M/s Progas 
Pakistan Ltd. and M/s Pakistan Power Resources submitted proposals. 
The Rental Power Projects had to run on RFO and gas fuels. It was the 
responsibility of buyer to provide gas when available, whereas, seller 
was bound to arrange for RFO fuels. Specifications provided by Techno 
Engineering Services Ltd. (Sahuwal, Sialkot) were S50MC-C7 MN 
B&W; and  by M/s Pakistan Power Resources (Piranghaib, Multan) 
were 192 MW (net) at mean site conditions based on GE Gas Turbines 
Generating Sets operable on RFO and gas fuels, of appropriate Make & 
Size and configuration acceptable to the Buyer. The proposals were 
HRC 7734-G/09 
[RPPs case] 
53 
evaluated by an Evaluation Committee, which by means of its report 
dated 11.12.2007 recommended for award of contract to M/s Techno 
Engineering Services (Pvt.) Ltd. as Option-I. A Scrutiny Committee 
constituted to scrutinize the bids, vide its report dated 04.01.2008 
found that all the three bidders for the plant were financially non-
responsive because they had failed to meet US$ 30 million net worth 
criterion. On re-invitation, fresh proposals were received from M/s 
Techno Engineering Services and M/s Pakistan Power Resources. On 
17.03.2008, the Board of Directors of PEPCO decided to split up the 
project as under: -  
 
150 MW RPP at Sahuwal, Sialkot  
 
192 MW RPP at Piranghaib, Multan 
 
Accordingly, on 24.03.2008, the Letters of Award were issued to M/s 
Techno Engineering Services Islamabad and to M/s Pakistan Power 
Resources respectively. RSCs were signed between the sellers and the 
buyer. Subsequently, RPP at Piranghaib was signed off on 14.09.2010. 
Extracts from such document have been reproduced in CMA 3992/11, 
which are as follows: -  
“4. Signing Off of Project 
(1) 
As per the minutes of the meeting held on 14 
September 2010 in the Ministry of Water and Power, the 
decision was taken at 5(vi) that Rental Power Multan is 
allowed to be signed off “on mutually acceptable condition 
between CPGCL and the sponsors”. 
(2) 
In its over-all settlement, PPR seeks the return of its 
Advance Payment Guarantee, Performance Guarantee and 
payment of US$1,001,771 in reimbursement of (a) its cost 
of US$ 451,746 on Project engineering, (b) US$ 5,328 on 
Performance Guarantee Charges, (c) US$ 77,143 on 
Advance Payment Guarantee, (d) interest of US$ 267,494 
on Performance Guarantee Charges and (e) US$ 200,000 
paid to Bank Islami as advisory and management fee.” 
HRC 7734-G/09 
[RPPs case] 
54 
 
44. 
 
In addition to that, the contract was signed between M/s 
Techno Engineering Services (bidder) and Northern Power Generation 
Company (NPGCL) being a licence holder for the generation of 
electricity, although it had never invited bids for the supply of electric 
power. Whereas, a contract being a bilateral document has to be 
reduced into writing by means of an agreement enforceable by law 
between the person who had made the proposal and the one who had 
accepted the same, or those who had made an offer to do a particular 
thing and accepted the same. Reference in this behalf may be made to 
section 2(g) of the Contract Act, 1872, which provides that an 
agreement enforceable by law is a contract. It seems that originally 
Rental Power Project of Piranghaib was unsolicited, but subsequently 
certain steps were taken purportedly to give an impression that it was 
a solicited project based on ICB. The expression ‘unsolicited’ has been 
used because while entering into contract with these companies, the 
procedure laid down in the Public Procurement Rules, 2004 (PPR) was 
not followed. Thus, requirements of International Competitive Bidding 
(ICB) were not completed. Following further irregularities have been 
committed in the award of the contract: -  
(1) 
The advertisement was contrary to Rule 12 of the Public 
Procurement Rules, 2004, inter alia, for following reasons:-  
(i) 
No advertisement was made on the Authority’s 
website in the manner and format specified by 
regulation by Authority from time to time;  
(ii) 
No advertisement was made on the website of 
PEPCO.  
(2) 
The original 250-300 MW RPP at Piranghaib, Multan was 
split up for two different sites, one at Piranghaib, Multan 
and the other at Sahuwal, Sialkot, which were awarded to 
two different companies without any advertisement and 
bid.  
HRC 7734-G/09 
[RPPs case] 
55 
(3) 
As per section 4.5(a) of the Rental Services Contracts 
(Sahuwal, Sialkot), executed between NPGCL and Techno 
Engineering Services Ltd, the seller was eligible to obtain 
in advance a down payment amounting to 7% of lump sum 
contract price, however, a major change was brought 
about vide amendment dated 11.06.2009 by increasing 
the down payment to 14%. Similarly, the additional 7% 
advance was also paid to M/s Pakistan Power Resources 
(Piranghaib, Multan).  
(4) 
As per section 4.5(a) ibid, the seller was eligible to obtain 
in advance the Down Payment amounting to 7 % of lump 
sum contract price for the term of rental services contract 
on submission of bank guarantee valid until 30 days after 
the target commercial operation date. The provision of 
bank guarantee of just 30 days for the whole rental term is 
inadequate for in case of default by the seller the buyer 
could get only that amount of total 7 % of which the seller 
has furnished bank guarantee. Beyond the period of 30 
days from the target operation date, the buyer could not 
recover any amount as there was no bank guarantee for 
the same.  
(5) 
As per clause (c) of section 4.5 ibid, the buyer was bound 
to deliver to the seller an irrevocable letter of credit in the 
amount equal to 36 monthly rental services fee payments, 
however, vide amendment No. 2 dated 24.11.2009, the 
SBLC 
was 
replaced 
with 
Government 
of 
Pakistan 
Guarantee with a view to giving maximum benefit to the 
seller.  
(6) 
As per LOA and the contract, the Seller were paid 7% 
Advance before COD. In case of Techno E. Services Ltd. 
Sahuwal, 7% advance amounting to US$11,550,000 and in 
case of M/s Pakistan Power Resources (Piranghaib, 
Multan), US$14,584,990 were paid. Bank guarantees were 
obtained before making the payment. It was not covered 
by the terms of the advertisement. Likewise, the provision 
of standby letter of credit in favour of the seller was also 
not in accordance with the advertisement.  
HRC 7734-G/09 
[RPPs case] 
56 
(7) 
According to the Act, 1997, the bidders i.e. Techno E. 
Power and Pakistan Power Resources were bound to obtain 
generating licences, but it was decided that the buyers 
would obtain said licences.  
 
It is to be kept in mind that as far as the capacity charges are 
concerned, the same were to be determined on the basis of bids, and 
if there was no competition, then likelihood of quoting highest capacity 
charges could not be overruled without knowing that what was the 
efficiency of the machinery although vide letter dated 13.04.2009 
NEPRA had stated that its life should not be more than 10 years.  
45. 
 
Apart from the signing off of Piranghaib RPP’s contract, the 
fact remains that both these projects were handled by the concerned 
authorities negligently, on account of which a huge loss had been 
caused to the public exchequer. Detailed discussion regarding 
unsolicited RPPs shall be undertaken subsequently, but primarily, 
examination of these RPPs reveals how casually PEPCO and NPGCL had 
dealt with the matter without considering their powers and jurisdiction, 
which ultimately cast a burden on the citizens, individually and 
collectively.  
(3) 
NISAHATABAD/SAMMUNDRI ROAD, FAISALABAD 
46. 
 
For setting up RPP of above 50 MW at Nishatabad, 
Faisalabad, initially for two years, extendible for further one year, 
advertisement dated 11.10.2007 was issued by Northern Power 
Generation Company Ltd. (NPGCL), laying down the eligibility criteria 
of having experience of providing similar Rental Power Facilities for 
minimum of 3 locations and net worth of not less than US$ 30 million 
(for last 3 years). Guaranteed availability of 88% on RFO fuel 
(aggregate during the term) was required in the advertisement and 
the date of commissioning was mentioned as 15.05.2008.  
HRC 7734-G/09 
[RPPs case] 
57 
47. 
 
Vide corrigendum/advertisement dated 24.10.2007, the 
eligibility criteria requiring “experience of providing similar rental 
power facilities for minimum of 3 locations” was deleted from the 
advertisement dated 11.10.2007. Vide corrigendum/advertisement 
dated 29.10.2007, the date for submission/opening of bids was 
extended 
to 
07.11.2007. 
Vide 
order 
dated 
03.11.2007 
and 
corrigendum/advertisement 
dated 
04.11.2007, 
the 
date 
for 
submission/opening was extended to 21.11.2007. In response to said 
advertisements, 20 parties made requests for supply of sample 
agreement, which was supplied. However, the following three parties 
submitted their Bids:-  
(a) 
M/s Techno Engineering (Pvt.) Ltd., Islamabad,  
(b) 
M/s Progas Pakistan Ltd., Karachi, and 
(c) 
M/s Pakistan Power Resources, Lahore. 
 
The Evaluation Committee gave its report on 01.01.2008 wherein 
following recommendations were made: -  
 On the basis of evaluation criteria, the bid offered by 
M/s Techno Engineering Services (Pvt.) Ltd. as Option-I 
(MAN B&W) equipment is lowest in Total Tariff, on RFO 
fuel, on the basis of Lump sum Contract Price, Rental 
Charges and Fuel Cost Component. 
 Value of Total Tariff and Rental Charges remain same 
for 3 and 4 years, therefore, 3 years Rental term is 
recommended, which may be extended to 4th year as 
per PEPCO power requirement. 
 The above Tariff components are worked out on the 
basis of guaranteed availability, while the plant factor 
on RFO operation is expected around 60% in a year. 
 All the bidders are not qualifying the minimum US$ 30 
million Net Worth. 
 The bidder may be asked to achieve Commercial 
Operation Date by 15.05.2008, otherwise the Rental 
Period would be reduced. 
 Proposal of bidder for shifting of site from Nishatabad, 
Faisalabad to Eminabad, Gujranwala may be considered 
because there will be saving of 1.93% of Lump Sum 
Contract Price, while power is also required in 
Gujranwala region. 
 Award of Rental Services Contract is recommended at 
the above Quoted Lump Sum Contract Price, for 
installation/operation of 150 MW net capacity, on 3 
HRC 7734-G/09 
[RPPs case] 
58 
rental years basis, at proposed site of Eminabad, 
Gujranwala at 132 kV voltage level. 
 
Letter of Award (LOA) was issued to M/s Techno E. Services (Pvt.) Ltd. 
on 22.01.2008 and amended LOA was issued on 22.01.2008. Advance 
payment guarantees were provided to the seller, which were extended 
for further periods through separate amendments. Approval for 
amendment in sample rent agreement and authorization to sign 
contract was obtained on 14.02.2008. Till 14.02.2008, the main site 
area was mentioned as Nishatabad, Faisalabad, but for the first time 
on 14.02.2008, while seeking approval for amendment in sample rent 
agreement and authorization to sign contract, it was mentioned as 
Sammundri Road, Faisalabad. After discussing the ADB Audit Report, 
the project was approved by the Cabinet.  
(4) 
KARKEY KARADENIZ ELEKTRIK 
48. 
 
To set up RPPs of 200 MW cumulative capacity near 
Karachi, advertisement dated 17.05.2008 was issued by PPIB following 
the ICB procedure. Two bidders, namely, Karkey Karadeniz Elektrik 
Uretim A.S. and Walters Power International fulfilled the requirements 
of the RFP. Tariff determination was done on 21.10.2008, RSC was 
signed on 05.12.2008 and advance payment of US$ 79.05 million was 
made on 12.05.2009. The original COD was fixed as 14.08.2009, 
which was first revised to 08.12.2009 and then to 07.04.2010. 
However, since the RSC did not come into effect, no obligations or 
rights accrued to either party thereunder. Amended & restated RSC 
was signed on 23.04.2010 for a rental term of 5 years.  
49. 
 
In the invitation for bids published by the PPIB, the bidders 
were required to quote rental charges and fuel cost component on 
delivery of energy at reference fuel prices. In some of the 
advertisements, exact location/sites were mentioned. For reference, 
HRC 7734-G/09 
[RPPs case] 
59 
the relevant portion of the advertisement dated 20.05.2015 in 
pursuance whereof contract was awarded to Karkey Karadeniz is 
reproduced hereinbelow: -  
“Venture into Secure, Profitable & Promising Power Sector of Pakistan 
INVITATION FOR BIDS 
1200 MW Fast Track Private Power Projects  
 
“Package B: 
  
Rental Power Project(s) of 200 MW cumulative capacity near Karachi. 
 
Capacity:  
Rental power project(s) including barge-mounted plants of 200 MW 
cumulative power generation capacity can be offered by the bidder(s). 
One or more project proposals/bids will be considered, until the limit of 
200 MW is attained.  
   
Fuel/Type: 
The bidders may offer projects of any multiple fuel (Residual Fuel 
Oil/Gas/Liquified Natural Gas/Liquified Petroleum Gas), technology and 
type.  
  
Site: Near Karachi  
 
Project commissioning: 
Project(s) are required to be operational within six (06) months from 
issuance of Letter of Award (LOA). 
 
Term of Project(s): 
The term of the project(s) would be 3-5 years. 
 
Project Agreement: 
The project agreement/contract for these projects would be in 
accordance with those earlier executed by PEPCO for Rental Projects.  
 
Evaluation Criteria:   
For evaluation of bids and award under this package, similar approach 
as that for Package-A would be followed, until cumulative capacity of 
200 MW is reached.  
 
Bidding Process Roadmap:  
 
The interested party/parties will be registered with PPIB after 
paying US$ 100 (or Pak Rs. 7000) for each Package and 
purchase Request for Proposal (RFP) after making a non-
refundable payment of US$ 2,000 (Pak Rs.140,000) for each 
Project. The registration process and sale of RFP will be 
completed from 20th May to 19th June 2008.  
 
The interested party/parties will submit complete bid in 
accordance with the RFP along with a refundable Bid Bond @ 
US$ 1,000 per megawatt (MW) of proposed Gross (ISO) 
Capacity of the Project and non-refundable bid evaluation fee of 
US$ 20,000.  
 
Payments to be made through Demand Draft/Pay Order drawn 
in favour of PPIB, payable at a bank branch in Islamabad 
Pakistan or through wire transfer.  
 
PPIB reserves the right to reject any or all bids without 
assigning any reason thereof.”  
 
HRC 7734-G/09 
[RPPs case] 
60 
The bidders gave their respective bids for rental charges and fuel cost 
component on Proformas XII/XIII. In this behalf, contents of 
Proformas No. XII & XIII, submitted by M/s Karkey are reproduced 
hereinbelow: -  
 “ANNEX – B 
 
Attachment 12 to the Bid Letter 
 
Proforma XII 
 
Bidder’s Offered Reference Tariff Table 
 
Rental Power Project 
Reference Tariff Table for Ranking Purpose 
 
Year 
Fuel 
(¢ per kWh) x 1.2 
Rental Rate 
(¢ per kWh) 
Total 
(¢ per kWh) 
1. 
10,2323 x 1.2 
6,3500 
18,6288 
2. 
10,2323 x 1.2 
6,3500 
18,6288 
3. 
10,2323 x 1.2 
6,3500 
18,6288 
4. 
10,2323 x 1.2 
6,3500 
18,6288 
5. 
10,2323 x 1.2 
6,3500 
18,6288 
 
Note: 
 
1. 
The calculation of Fuel Cost Component and Rental Rate 
will be made according to the Proforma XIII 
2. 
For conversion of Fuel Cost Component from Pak Rs. To US 
Cents, the conversion rate of 1 US$ = 62 Pak Rs. Shall be 
used.” 
 
 
“Attachment 13 to the Bid Letter 
 
Proforma XIII 
 
Pricing -  Lump Sum Rental Charges, Rental Rate and Reference 
Fuel Cost Component 
 
a) 
Pricing – Lump Sum Rental Charges for 60 Months Rental 
Term. 
 
 
HRC 7734-G/09 
[RPPs case] 
61 
Description 
Duration 
(Months) 
Lump Sum Rental 
Charges (US$) 
 
Rental 
Services 
of 
the 
Equipment including but not 
limited 
to 
SELLERS’S 
responsibilities mentioned in 
the 
Rental 
Services 
Contract: 
Transport to/from Company 
Site Mobilization and de-
mobilization Installation and 
commissioning 
Operation 
and maintenance. 
 
60 Months 
(as per 
applicable 
Rental 
Term) 
 
$ 
599.575.966,20 
(US 
Dollars 
Five 
Hundred 
Ninety-
nine 
Million 
Five 
Hundred 
Seventy 
Five Thousand Nine 
Hundred 
Sixty-six 
and 
twenty 
cents 
only) 
 
b) 
Rental Rate 
The Rental Rate 6,3500 US Cents/kWh based on the Lump Sum 
Rental Charges given in the Table above is calculated using the 
following formula: 
 
Rental Rate (Cents/kWh) = 
Lump Sum Rental Charges in US Dollars x 100  
 
 
 
 
Net Capacity in MW x 1000 x Rental Term in years x number of hours 
in year x Guaranteed Availability  
 
Where:  
 
Net Capacity of Rental Plant:  
231.8 MW (net) at Mean Site 
Conditions 
Guaranteed Available of Equipment: 
93% 
No. of Hours in a year:  
 
 
8760” 
 
50. 
 
The above rental charges for supply of energy per kWh 
were quoted on the basis of reference value. It is pertinent to mention 
that a buyer should always be interested to get installed a power 
plant, which can produce more electricity. Obviously, the charges were 
quoted purely on presumptive basis, as at the time of submitting bid 
documents, no plan was available. Thus, there was no competition 
between bidders as the competition would be possible, if the buyer 
had fixed the reserved price and had also specified the make, model 
and life of the plant. In view of such situation, NEPRA vide letter dated 
13.04.2009, which is reproduced hereinabove, notified that old plants 
having life of more than 10 years or plants which had completed 
60000 operating hours would not be acceptable.  
HRC 7734-G/09 
[RPPs case] 
62 
(5) 
GULF, EMINABAD, GUJARANWALA and INDEPENDENT 
POWER (Pvt.) Ltd., GOJRA, FAISALABAD  
 
51. 
 
To set up a 100 MW IPP or above 50 MW RPP at any site in 
Pakistan, advertisement dated 26.09.2008 was issued by PPIB. There 
were no specific conditions regarding the capacity, type of fuel, 
technology of plant, site, etc. In response to the said advertisement, 
the following parties submitted bids: -  
(a) 
ALSTOM Power Rentals for 200 MW project near 220 
kV Ludewala - Sargodha Grid Station.  
(a) 
Gulf Rental Power for 80.5 MW project adjacent to 
132 kV Eminabad - Gujranwala Grid Station. 
(b) 
Independent Power Pvt. Ltd. for 220.97 MW project 
near 132 kV Gojra - Faisalabad Grid Station. 
 
The PPIB in its meeting held on 20.12.2008 approved processing of 
Letter of Award (LOA) to Gulf. The NEPRA approved the tariff of Gulf 
on 13.04.2009. LOA was issued to M/s Gulf Rental Power on 
27.04.2008. Advance Payment Guarantees were provided to the seller 
as such Advance payment was made on 19.09.2009. Original 
commercial operation date (COD) was 31.12.2009 which was revised 
to 29.04.2010 and the Project was commissioned on the said date.  
52. 
  
The Ministry of Water & Power vide letter dated 
24.01.2009 forwarded the summary on fast track rental power 
projects through ICB with respect to Gulf. NEPRA vide letter dated 
18.02.2009 communicated its response. Relevant Para is given 
hereunder: -  
“(iii) However, it has been observed that due to poor 
response from IPPs, PPIB is accepting more rental power 
plants, which have considerably lower efficiencies. NEPRA 
therefore recommends as follows: 
 
(a) 
The induction of rental power projects on furnace oil 
with very lower thermal efficiency should be 
discouraged. 
The 
present 
induction 
should 
be 
allowed for a limited time and further additions in the 
system be made through life-cycle investment 
analysis of the projects. This is extremely critical in 
HRC 7734-G/09 
[RPPs case] 
63 
view of the fuel cost component which forms a major 
component of overall tariff.  
(b) 
While developing RFP for any future induction of IPPs 
under ICB, the regulator should be kept on board.  
(c) 
During evaluation of bids, NEPRA’s earlier tariff 
determinations should be considered as a reference.” 
 
53. 
 
The PPIB vide letter dated 24.01.2009 declared the above-
referred RPPs as qualified bidder, which was arrived at through ICB 
and was advised to approach NEPRA for approval of the approved 
tariff. Ministry of Water & Power vide letter dated 20.02.2009 advised 
NEPRA to approve the approved tariff. The Authority considered that: 
(i) 
Acute power shortage in the country and recognizes the 
importance of fast track projects and supports the 
endeavor of the Ministry of Water & Power for induction of 
additional power. 
(ii) 
Poor response from IPPs regarding bidding process due to 
which PPIB had to accept more rental power plants with 
lower efficiencies. 
(iii) 
Rental Tariff was accepted by GOP and denying approval in 
the instant case would result in further delay the additional 
power and would give wrong signal to the private 
investors. 
 
While granting approval of these rental projects on 13.04.2009 NEPRA 
gave its observation in the said decision that though tariff arrived at 
through competitive bidding is not subject to further review by NEPRA, 
but the Authority still needs to consider the provisions of section 
31(2)(a),(c)&(d) of the NEPRA Act, which require NEPRA to protect 
consumers against monopolistic prices; to encourage efficiency in 
licensees operations and quality of service and to encourage economic 
efficiency in the electric power industry.  Hence at the time of granting 
the tariff in question, the NEPRA vide letter dated 13.04.2009 
recommended that in future:- 
(i) 
The induction of rental power projects on furnace oil with 
very low thermal efficiency should be discouraged. This 
becomes even more critical in view of the fuel cost 
component, which forms a major component of overall 
tariff. 
HRC 7734-G/09 
[RPPs case] 
64 
(ii) 
Before initiating ICB, the RFP should be got approved by 
NEPRA. 
(iii) 
During 
evaluation 
of 
bids 
NEPRA’s 
earlier 
tariff 
determinations be considered as reference. 
(iv) 
The rental power plants more than 10 years old or more 
than 60,000 operating hours may not be accepted. 
 
As per GENCO, the RSC with IPL was not signed and in the light of the 
Cabinet decision dated 27.01.2010, the project was discontinued.   
54. 
 
From a perusal of the above facts, it is evident that 
following grave irregularities were committed in the award of the 
contract: -  
(1) 
No specific conditions were provided in the advertisement 
regarding the capacity, type of fuel, technology of plant, 
site, etc. The bidders were to finalize sites in coordination 
with PEPCO. The project was to be commissioned within 6-
8 months from issuance of Letter of Award (LOA).  
(2) 
Eligibility criteria, as provided in the advertisements by 
PRPCO, such as, having similar experience for minimum of 
3 locations and Net worth of not less than US$ 30 M (for 
last 3 years), was not provided.  
(3) 
The seller was eligible to obtain in advance a down 
payment amounting to 7% of lump sum contract price, 
however, a major change was brought about and 
additional 7% advance was paid to Gulf Rental Power.  
(4) 
As per section 4.5(a) ibid, the seller was eligible to obtain 
in advance the Down Payment amounting to 7 % of lump 
sum contract price for the term of rental services contract 
on submission of bank guarantee valid until 30 days after 
the target commercial operation date. The provision of 
bank guarantee of just 30 days for the whole rental term is 
inadequate for in case of default by the seller the buyer 
could get only that amount of total 7 % of which the seller 
has furnished bank guarantee. Beyond the period of 30 
days from the target operation date, the buyer could not 
recover any amount as there was no bank guarantee for 
the same.  
HRC 7734-G/09 
[RPPs case] 
65 
(5) 
As per clause (c) of section 4.5 ibid, the buyer was bound 
to deliver to the seller an irrevocable letter of credit in the 
amount equal to 36 monthly rental services fee payments, 
however, vide amendment No. 2 dated 24.11.2009, the 
SBLC 
was 
replaced 
with 
Government 
of 
Pakistan 
Guarantee with a view to giving maximum benefit to the 
seller.  
(6) 
Tariff determination was done on 13.04.2009 and payment 
of 7% advance in the sum of US$ 11.9 million was made 
on 19.02.2009 before COD.  
(7) 
The original Commercial Operation Date was 31.12.2009 
but the COD cannot be achieved as such the same was 
revised to 29.04.2009 when COD was achieved.  
(8) 
The Project was to run on RFO and the NEPRA advised that 
the induction of rental power projects on furnace oil with 
very low thermal efficiency should be discouraged.  
(9) 
Rental tariff was approved by NEPRA on the ground that 
tariff had already been accepted and denying approval 
would result in further delay the additional power and 
would give wrong signal to the private investors.  
 
(6) 
RESHMA, RAIWIND ROAD, LAHORE 
 
55. 
 
To set up above 50 MW RPP capacity at any site to be 
finalized in coordination with PEPCO, advertisement dated 23.12.2008 
was issued by PPIB following the ICB procedure. Ten bidders 
participated in the bidding out of whom eight bidders were 
recommended by the Evaluation Committee. The Committee also 
observed that there was room for tariff reduction, hence quoted tariffs 
may be negotiated with the bidders. The bid of Reshma Power was 
approved 
on 
14.04.2009. 
Tariff 
determination 
was 
done 
on 
29.05.2009. RSC was signed on 06.09.2009. Advance payment of US$ 
55.27 million was made on 03.10.2009. The COD was fixed as 
31.12.2009, which was not achieved, therefore, the advance payment 
was returned. However, after the project achieved partial COD, 
HRC 7734-G/09 
[RPPs case] 
66 
permission was sought from the NEPRA, but the same was declined as 
the proposal was against the agreed contractual terms.  
LIFE OF RPPs 
56. 
 
Unfortunately, NEPRA specifications in respect of the life of 
the power plants were not adhered to strictly. For example, the 
machinery to be installed at Naudero, which was sought to be removed 
from Guddu after it had been signed off was admittedly more than 10 
years old, as such NEPRA had declined to grant necessary permission. 
Similarly, in respect of Karkay power plant, Mr. Muhammad Akram 
Sheikh, Sr. ASC asserted that 60% of the plant machinery was brand 
new whereas the remaining 40% was only 3 years old. In addition to 
it, during arguments it was pointed out that the said machinery was 
more than 25 years old. Thus, contention raised by Makhdoom Syed 
Faisal Saleh Hayat that no technical qualification/pre-condition was in 
place to ascertain the quality, efficacy and optimum performance of 
the imported plants as per international standards is correct.  
UNIT COST PER KWh 
57. 
 
It is to be seen that RPPs are mostly based on RFO 
(Residual Fuel Oil), HSFO and Gas. As far as RFO is concerned, its 
prices are increasing day-by-day and the bidders were allowed to get 
reference fuel price for RFO equal to Rs.26,000/- per metric ton ex-
Karachi without inland transportation cost and sales tax. The bidders 
would workout inland transportation costs and base its fuel cost 
component in the bid on delivered fuel price on site (Pak Rs.26,000/- 
inland transportation cost) as well as fuel adjustment as per contract 
and perhaps due to this reason, power plants based on RFO produced 
electricity at a higher cost. To demonstrate this aspect of the case, we 
may point out that during hearing of the case, respondents were called 
HRC 7734-G/09 
[RPPs case] 
67 
upon to submit details of RPPs operating at the relevant time to 
ascertain unit cost per kWh. Accordingly, a chart was placed on record 
for our perusal showing per unit cost, being charged from the 
Government by Gulf, Karkay, Reshma and Walters Power (Naudero-I). 
The details of each of the power plants are as under: -  
 
 
 
Gulf Rental 
Power 
 
 
 
Karkey 
Karadeniz 
 
 
 
 
 
 
1 
 
 
 
2 
 
 
 
i 
Contracted 
Capacity-MW 
62 
 
 
 
231.8 
 
 
 
ii 
Contracted 
Availability-MW 
92% 
 
 
 
93% 
 
 
 
iii 
Commercial 
Operation Date-
COD 
26.04.2010 
 
 
 
13.4.2011 
 
 
 
iv 
Guaranteed Net 
Electric Output-       
kWh, per Month 
of 30 Days 
40,176,000 
 
 
 
155,213,280 
 
 
 
v 
Daily guaranteed 
Net Elect Output 
1339,200 
 
 
 
5,173,776 
 
 
 
vi 
Total Rent for 5 
Years-USD 
85,000,000 
 
 
 
564,640,043 
 
 
 
vii 
Monthly Rent-
USD 
1,415,667 
 
 
 
9,410,667 
 
 
 
vii 
Daily Rent-USD 
(30.42 Days in 
Month  
46,570 
 
 
 
309,358 
 
 
 
ix 
Cents-Per kWh 
3.4778 Rs-
3.03 
 
 
 
5.98 Rs-
5.20 
 
 
 
x 
RFO Price-Rs Per 
Kg (dated 
11.10.11 
applicable to 
nearest IPP and 
Genco) including 
transportation 
cost of each 
68.00 
 
 
 
61.66 
 
 
 
xi 
xi RFO 
Consumption-per 
Kwh-grams 
234.99 
 
 
 
244.00 
 
 
 
 
 
 
 
Rs 
Rs 
Rs 
 
Rs 
Rs 
Rs 
Days 
Date 
 
kWh 
Rent-
kWh 
Fuel- 
kWh 
Unit 
Cost- 
kWh 
kWh 
Rent- 
kWh 
Fuel- 
kWh 
Unit 
Cost- 
kWh 
1 
26.10.11 
 
1,245,466 
3.253 
15.98 
19.23 
2,762,600 
9.74 
15.05 
24.79 
2 
25.10.11 
 
1,246,261 
2.251 
15.98 
19.23 
3,035,900 
8.87 
15.05 
23.91 
3 
24.10.11 
 
1,248,457 
3.245 
15.98 
19.22 
3625,000 
7.42 
15.05 
22.47 
4 
23.10.11 
 
1,105,938 
3.664 
15.98 
19.64 
3,682,500 
7.31 
15.05 
22.35 
5 
22.10.11 
 
1,096,070 
3.696 
15.98 
19.68 
3,398,800 
7.92 
15.05 
22.96 
6 
21.10.11 
 
1,197,786 
3.383 
15.98 
19.36 
2,102,400 
12.80 
15.05 
27.85 
7 
20.10.11 
 
1,229,730 
3.295 
15.98 
19.27 
1,698,600 
15.84 
15.05 
30.89 
8 
19.10.11 
 
1,1150,542 
3.521 
15.98 
19.50 
1,62,000 
16.54 
15.05 
31.59 
9 
18.10.11 
 
1,245,197 
3.254 
15.98 
19.23 
932,300 
28.87 
15.05 
43.91 
10 
17.10.11 
 
1,219,752 
3.322 
15.98 
19.30 
897,200 
30.00 
15.05 
45.04 
11 
16.10.11 
 
1,230,098 
3.294 
15.98 
19.27 
850,100 
31.66 
15.05 
46.71 
12 
15.10.11 
 
1,126,913 
3.595 
15.98 
19.57 
785,500 
34.26 
15.05 
49.31 
13 
14.10.11 
 
1,222,272 
3.315 
15.98 
19.29 
822,600 
32.72 
15.05 
47.76 
14 
13.10.11 
 
1,262,320 
3.210 
15.98 
19.19 
864,600 
31.13 
15.05 
46.17 
15 
12.10.11 
 
1,201,690 
3.372 
15.98 
19.35 
911,500 
29.53 
15.05 
44.57 
16 
11.10.11 
 
1,198,484 
3.381 
15.98 
19.36 
876,500 
30.71 
15.05 
45.75 
17 
10.10.11 
 
1,101,726 
3.678 
15.98 
19.66 
849,100 
31.70 
15.05 
46.74 
18 
09.10.11 
 
1,218,411 
3.325 
15.98 
19.30 
832,900 
32.31 
15.05 
47.36 
19 
08.10.11 
 
1,291,849 
3.136 
15.98 
19.18 
846,000 
31.81 
15.05 
46.86 
20 
07.10.11 
 
1,476,273 
2.744 
15.98 
18.72 
885,900 
30.38 
15.05 
45.43 
21 
06.10.11 
 
1,479,693 
2.738 
15.98 
18.72 
2,454,000 
10.97 
15.05 
26.01 
22 
05.10.11 
 
1,476,375 
2.744 
15.98 
18.72 
919,100 
29.28 
15.05 
44.33 
23 
04.10.11 
 
1,471,224 
2.754 
15.98 
18.73 
1,722,400 
15.63 
15.05 
30.67 
24 
03.10.11 
 
1,393,148 
2.908 
15.98 
18.89 
1,207,700 
22.29 
15.05 
37.33 
25 
02.10.11 
 
1,372,433 
2.952 
15.98 
18.93 
1,109,700 
24.25 
15.05 
29.30 
26 
01.10.11 
 
1,387,320 
2.920 
15.98 
18.90 
787,700 
34.17 
15.05 
49.21 
HRC 7734-G/09 
[RPPs case] 
68 
27 
30.09.11 
 
1,410,694 
2.872 
15.98 
18.85 
714,300 
37.68 
15.05 
52.72 
28 
29.09.11 
 
1,174,616 
3.449 
15.98 
19.43 
839,600 
32.06 
15.05 
47.10 
29 
28.09.11 
 
1,265,478 
3.202 
15.98 
19.18 
723,500 
37.20 
15.05 
52.24 
30 
27.09.11 
 
1,241,496 
3.263 
15.98 
19.24 
769,500 
34.98 
15.05 
50.02 
 
 
 
37,987,712 
 
 
 
43,534,500 
 
 
 
Average- MW 
Produced 
 
52.76 
 
 
 
60.45 
 
 
 
Average-MW 
Required 
 
52.76 
 
 
 
215.57 
 
 
 
31 
26.09.11 
 
1,410,222 
2.873 
15.98 
18.85 
793,700 
33.91 
15.05 
48.95 
32 
25.09.11 
 
1,473,520 
2.750 
15.98 
18.73 
991,300 
27.15 
15.05 
42.20 
33 
24.09.11 
 
1,452,493 
2.789 
15.98 
18.77 
970,900 
27.72 
15.05 
42.77 
34 
23.09.11 
 
1,466,412 
2.763 
15.98 
18.74 
1,219,000 
22.08 
15.05 
37.12 
35 
22.09.11 
 
1,220,807 
3.3188 
15.98 
19.30 
918,600 
29.30 
15.05 
44.34 
36 
21.09.11 
 
1,278,875 
3.168 
15.98 
19.15 
907,900 
29.64 
15.05 
44.69 
37 
20.09.11 
 
1,270,950 
3.188 
15.98 
19.17 
1,244,100 
21.63 
15.05 
36.68 
38 
19.09.11 
 
1,263,907 
3.206 
15.98 
19.18 
1,153,200 
23.34 
15.05 
38.38 
39 
18.09.11 
 
1,332,039 
3.042 
15.98 
19.02 
1,328,200 
20.26 
15.05 
35.31 
40 
17.09.11 
 
1,266,455 
3.199 
15.98 
19.18 
1,354,700 
19.87 
15.05 
34.91 
41 
16.09.11 
 
1,131,801 
3.580 
15.98 
19.56 
,1,290,600 
20.85 
15.05 
35.90 
42 
15.09.11 
 
1,210,123 
3.348 
15.98 
19.33 
1,031,300 
26.10 
15.05 
41.14 
43 
14.09.11 
 
1,293,702 
3.132 
15.98 
19.11 
1,020,600 
26.37 
15.05 
41.42 
44 
13.09.11 
 
1,285,529 
3.152 
15.98 
19.13 
1,232,400 
21.84 
15.05 
36.88 
45 
12.09.11 
 
1,455,252 
2.784 
15.98 
18.76 
1,236,500 
21.77 
15.05 
36.81 
46 
11.09.11 
 
1,502,209 
2.697 
15.98 
18.68 
1,561,000 
17.24 
15.05 
32.29 
47 
10.09.11 
 
1,468,461 
2.759 
15.98 
18.74 
1,282,300 
20.99 
15.05 
36.03 
48 
09.09.11 
 
1,467,458 
2.761 
15.98 
18.74 
1,300,000 
20.70 
15.05 
35.75 
49 
08.09.11 
 
1,412,664 
2.868 
15.98 
18.85 
1,183,400 
22.74 
15.05 
37.79 
50 
07.09.11 
 
1,440,554 
2.813 
15.98 
18.79 
1,065,900 
25.25 
15.05 
40.30 
51 
06.09.11 
 
1,462,116 
2.771 
15.98 
18.75 
921,200 
29.22 
15.05 
44.26 
52 
05.09.11 
 
1,418,116 
2.857 
15.98 
18.84 
856,400 
31.43 
15.05 
46.47 
53 
04.09.11 
 
1,421,350 
2.851 
15.98 
18.83 
813,000 
33.10 
15.05 
48.15 
54 
03.09.11 
 
1,146,095 
3.535 
15.98 
19.51 
843,200 
31.92 
15.05 
46.96 
55 
02.09.11 
 
1,318,673 
3.072 
15.98 
19.05 
861,200 
31.29 
15.05 
46.33 
56 
01.09.11 
 
1,313,364 
3.085 
15.98 
19.06 
813,900 
33.07 
15.05 
48.11 
57 
31.08.11 
 
1,400,965 
2.892 
15.98 
18.87 
844,100 
31.89 
15.05 
46.93 
58 
30.08.11 
 
1,418,241 
2.857 
15.98 
18.84 
1329,800 
20.24 
15.05 
35.28 
59 
29.08.11 
 
1,375,102 
2.946 
15.98 
18.93 
1,684,800 
15.97 
15.05 
31.02 
60 
26.09.11 
 
1,457,481 
2.780 
15.98 
18.76 
2,113,000 
12.74 
15.05 
27.78 
 
 
 
40,834,936 
 
 
 
34,165,200 
 
 
 
Average- MW 
Produced 
 
56.71 
 
 
 
47.45 
 
 
 
Average-MW 
Required 
 
55.80 
 
 
 
215.57 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assumption 
 
 
 
 
 
 
 
 
 
1- 
Exchange 
Rate 
 
1USD=87 
 
 
 
 
 
 
 
2- 
Average Days in 
a Month for  
the calculation 
of Rent in  
Cents 
30.42 Days 
 
 
 
 
 
 
 
 
 
Reshma  
  Power 
  Water  
  Power 
Naudero-I 
 
      3 
       4 
i.     Contracted 
Capacity-MW 
201.3 
51 
ii.    Contracted 
Availability-MW 
90% 
92% 
iii.   Commercial 
Operation Date-COD 
 
14.7.2011 
iv.   Guaranteed Net 
Electric Output-kWh,  
       Per Month of 30 
Days 
130442400 
33782400 
v.    Daily Guaranteed 
Net Elect Output 
4348080 
1126080 
vi.   Total Rent for 5 
Years-USD 
394778489 
80420000 NEPRA approved 
vii.   Monthly Rent-
USD 
6579641 
1340333 
viii.  Daily Rent-USD 
(30.42 Days in Month) 
216293 
44061 
ix.    Cents-Per kWh 
4.975 Rs-4.32 
3.91 Rs-3.40 Vs RSA ~ 4.46/Rs-3.88 
x.     RFO Price-Rs Per 
Kg (Dated 11.10.11    
65.86 
447 Gas-SPS Faisalabad 
HRC 7734-G/09 
[RPPs case] 
69 
        applicable to 
nearest IPP and 
Genco)  
        including 
transportation cost of 
each 
xi.    RFO 
Consumption-per 
kWh-grams 
238.53 
9949 BTU/kWh-Heat Rate 
 
 
 
 
 
 
Rs. 
Rs. 
Rs. 
 
Rs. 
Rs. 
Rs. 
Days 
Date 
kWh 
Rent- 
kWh 
Fuel- 
kWh 
Unit 
Cost- 
kWh 
kWh 
Rent-
kWh 
Fuel-
kWh 
Unit Cost-
kWh 
1 
26.10.11 
1319664 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
2 
25.10.11 
501712 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
3 
24.10.11 
184657 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
4 
23.10.11 
478675 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
5 
22.10.11 
483842 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
6 
21.10.11 
414615 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
7 
20.10.11 
524012 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
8 
19.10.11 
608000 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
9 
18.10.11 
693000 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
10 
17.10.11 
618280 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
11 
16.10.11 
631310 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
12 
15.10.11 
852830 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
13 
14.10.11 
722340 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
14 
13.10.11 
677043 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
15 
12.10.11 
780632 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
16 
11.10.11 
1032500 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
17 
10.10.11 
912000 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
18 
09.10.11 
519000 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
19 
08.10.11 
71000 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
20 
07.10.11 
 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
21 
06.10.11 
64190 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
22 
05.10.11 
25415 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
23 
04.10.11 
 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
24 
03.10.11 
 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
25 
02.10.11 
 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
26 
01.10.11 
 
0 
15.71 
15.71 
357585 
10.72 
4.45 
15.17 
27 
30.09.11 
88000 
0 
15.71 
15.71 
500451 
7.66 
4.45 
12.11 
28 
29.09.11 
 
0 
15.71 
15.71 
427360 
8.97 
4.45 
13.42 
29 
28.09.11 
34812 
0 
15.71 
15.71 
475348 
8.06 
4.45 
12.51 
30 
27.09.11 
 
0 
15.71 
15.71 
501588 
7.64 
4.45 
12.09 
 
 
122375
29 
 
 
 
22623
32 
 
 
 
Average MW-
Produced 
17.00 
 
 
 
3.14 
 
 
 
Average MW-
Required 
181.17 
 
 
 
47 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rs. 
Rs. 
Rs. 
 
Rs. 
Rs. 
Rs. 
Days 
Date 
kWh 
Rent- 
kWh 
Fuel- 
kWh 
Unit 
Cost- 
kWh 
kWh 
Rent-
kWh 
Fuel-
kWh 
Unit Cost-
kWh 
31 
26.09.11 
 
0 
15.71 
15.71 
502584 
7.63 
4.45 
12.07 
32 
25.09.11 
 
0 
15.71 
15.71 
329600 
11.63 
4.45 
16.08 
HRC 7734-G/09 
[RPPs case] 
70 
33 
24.09.11 
 
0 
15.71 
15.71 
505900 
7.58 
4.45 
12.02 
34 
23.09.11 
 
0 
15.71 
15.71 
505940 
7.58 
4.45 
12.02 
35 
22.09.11 
 
0 
15.71 
15.71 
499614 
7.67 
4.45 
12.12 
36 
21.09.11 
 
0 
15.71 
15.71 
505968 
7.58 
4.45 
12.02 
37 
20.09.11 
 
0 
15.71 
15.71 
505604 
7.58 
4.45 
12.03 
38 
19.09.11 
 
0 
15.71 
15.71 
500992 
7.65 
4.45 
12.10 
39 
18.09.11 
152000 
0 
15.71 
15.71 
500116 
7.57 
4.45 
12.02 
40 
17.09.11 
 
0 
15.71 
15.71 
259308 
14.78 
4.45 
12.23 
41 
16.09.11 
 
0 
15.71 
15.71 
506320 
7.57 
4.45 
12.02 
42 
15.09.11 
34000 
0 
15.71 
15.71 
382276 
10.03 
4.45 
14.47 
43 
14.09.11 
 
0 
15.71 
15.71 
443744 
8.64 
4.45 
13.09 
44 
13.09.11 
 
0 
15.71 
15.71 
506260 
7.57 
4.45 
12.02 
45 
12.09.11 
 
0 
15.71 
15.71 
482388 
7.95 
4.45 
12.39 
46 
11.09.11 
 
0 
15.71 
15.71 
484192 
7.92 
4.45 
12.36 
47 
10.09.11 
 
0 
15.71 
15.71 
502372 
7.63 
4.45 
12.08 
48 
09.09.11 
 
0 
15.71 
15.71 
323168 
11.86 
4.45 
16.31 
49 
08.09.11 
 
0 
15.71 
15.71 
506080 
7.57 
4.45 
12.02 
50 
07.09.11 
 
0 
15.71 
15.71 
506204 
7.57 
4.45 
12.02 
51 
06.09.11 
 
0 
15.71 
15.71 
506094 
7.57 
4.45 
12.02 
52 
05.09.11 
 
0 
15.71 
15.71 
412550 
9.29 
4.45 
13.74 
53 
04.09.11 
 
0 
15.71 
15.71 
498544 
7.69 
4.45 
12.14 
54 
03.09.11 
 
0 
15.71 
15.71 
505920 
7.58 
4.45 
12.02 
55 
02.09.11 
 
0 
15.71 
15.71 
505920 
7.58 
4.45 
12.02 
56 
01.09.11 
 
0 
15.71 
15.71 
505752 
7.58 
4.45 
12.03 
57 
31.08.11 
 
0 
15.71 
15.71 
499174 
7.68 
4.45 
12.13 
58 
30.08.11 
 
0 
15.71 
15.71 
331256 
11.57 
4.45 
16.02 
59 
29.08.11 
 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
60 
28.08.11 
 
0 
15.71 
15.71 
 
383330
0 
4.45 
3833305 
 
 
186000 
 
 
 
13029
840 
 
 
 
Average MW-
Produced 
0.25 
 
 
 
18 
 
 
 
Average MW-
Required 
181.17 
 
 
 
47 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12423529   Saving  
Rs.53.669 M  
 
 
A perusal of the above chart shows that unit cost per kWh of electricity 
procured from RPPs is exorbitantly on the high side and the electricity 
so generated by above RPPs is then to be transmitted to NTDC, which 
is responsible for its further supply to the consumers after adding 
charges of overhead transmission and dispatch.  
58. 
 
The learned counsel appearing for Reshma stated that 
after signing off the project, matter is under consideration of the 
Cabinet to allow the sponsors to operationalize the project because 
they have made a huge investment and the plant is producing 
electricity without charging even fuel cost so far. However, it may be 
observed that since we have examined the case of RPPs on the basis 
of broad principle, therefore, in our considered opinion, the case of 
Reshma also suffers from the same illegalities and irregularities on the 
HRC 7734-G/09 
[RPPs case] 
71 
basis of which it is not possible to conclude that the contract was 
awarded in a transparent manner.  
59. 
 
As far as production of Karkay and Reshma is concerned, it 
is evident from the table prepared by PEPCO, which is reproduced 
hereinabove, that both plants are presently producing 48.33 & 14.57 
MW against the agreement of producing 231 & 201 MW of electricity 
respectively.   
60. 
 
It is to be noted that despite the fact that rental tariff is to 
be determined by NEPRA, but it failed to discharge its functions in 
terms of section 7 of the Act, 1997, inasmuch as there were clear 
directions that tariff should be fixed at par with that of the IPPs, but 
the tariffs of both the categories i.e. solicited and unsolicited were 
fixed on the higher side.  
RECOVERY FROM SAHUWAL, SIALKOT/SUMMUNDRI ROAD, 
FAISLABAD 
 
61. 
 
Not only in the unsolicited RPPs, but also in some of the 
other cases the sponsors of the RPPs had received the down payment 
but in spite of that they had failed to achieve COD. In this behalf, 
reference may be made to various cases, particularly, the case of 
Techno-E Power Sahuwal, Sialkot, facts whereof have already been 
mentioned hereinabove. Precisely, at this stage, it is to be noted that 
without inviting fresh bids/following ICB procedure, 150 MW RPP at 
Sahuwal, Sialkot, which was carved out of 250-300 MW RPP at 
Piranghaib was dolled out to Techno E Power for four years at a rental 
value of US$ 165 million and advance payment of US$ 11.55 million. It 
was reported that no machinery was available on the site. Therefore, 
vide letter No. CEO/MZG/Rental/13481-84 dated 24.12.2010 NPGCL 
informed NEPRA that the RSC was not effective, therefore, the GENCO 
should have recovered 7% advance payment already made along with 
HRC 7734-G/09 
[RPPs case] 
72 
further penalties prescribed in RSC. Similarly, in respect of another 
RPP awarded by PEPCO following the ICB procedure to Techno-E 
Power, Sammundri Road, Faisalabad for a period of three years, rental 
value whereof was determined at US$ 135 million, 14% advance 
payment of US$ 18.9 million was made 7% on 26.02.2008 and 7% on 
01.04.2009, tariff was determined on 30.10.2009 and the COD was 
135 days from LOA, which was revised to partial COD 30.06.2009 and 
full COD 30.07.2009, and only partial COD for 60 MW was reportedly 
achieved on 11.06.2010, but the NEPRA declined to recognize said 
COD. It is further to be noted that in respect of M/s Techno E Power 
Sahuwal, Sialkot, which had failed to import machinery, following 
order was passed: -  
“Therefore, Techno Sahuwal, whose case is also identical 
with these three RPPs, is directed to deposit advance 
amount with markup by tomorrow otherwise case shall be 
registered with the F.I.A. because after receiving the 
money for about more than two years no progress has 
been shown and such practice cannot be allowed to 
continue in the national interest. For this purpose case is 
adjourned to 14th January, 2011 when the proprietor/Chief 
Executive Officer of the said project is directed to remain 
in attendance. Manager Askari Bank Blue Area Islamabad, 
with whom guaranties are lying be also directed to attend 
this Court along with record of load/advance granted to 
Techno Sahuwal on the said date.” 
62. 
 
On 14.01.2011, Raja Anwar-ul-Haq, learned ASC appeared 
and filed a statement that by 17.01.2011 advance money received by 
Techno E. Power, Sahuwal would be returned with mark-up. On the 
next date of hearing, learned counsel submitted that the payment was 
to be made through a Pay Order, which was in the clearance process, 
as such, case was adjourned to 18.01.2011, on which date, Raja 
Anwar-ul-Haq 
handed 
over 
two 
Pay 
Orders 
(No.171838 
for 
HRC 7734-G/09 
[RPPs case] 
73 
Rs.781,357,500/- and No.1701839 for Rs.300,892,500/-) to Ghulam 
Mustafa Tunio, Chief Executive, GENCO. 
63. 
 
Raja Anwar-ul-Haq subsequently filed two miscellaneous 
applications, i.e. CMAs No. 5002/2011 and CMA No. 4781/2011 with 
the same prayer which reads as under: -  
“Under the circumstances it is most respectfully prayed 
that this August Court may graciously be pleased to pass 
appropriate orders based on facts mentioned in the 
body/grounds of instant petition and Site Status of the 
plant/machinery submitted by NPGCL and may pass 
direction to NPGCL/WAPDA to refund the Advance money 
with markup received 7% Additional amount as per facts 
beside payment of remained 7% Additional amount as per 
RSC/Amendment and also to comply with notice of default 
and to fulfill all terms and conditions of the contract in 
order to enable that petitioner company to generate and 
smooth functioning of the plant to produce and supply 
electricity in Public interest. 
 
Further prayed to Declare that the submitting of false 
statement contrary to the facts regarding import of 
machinery and plant in the name of NPGCL and storage at 
WAPDA warehouse at site, is a case of abuse of official 
powers and exercise of authority arbitrarily and with 
ulterior motives and the concerned responsible of NEPRA 
succeeded in obtaining favorable order from this August 
Court on 13.01.2011 which caused heavy injury and loses 
to the Petitioner Company and resulted in heavy 
Miscarriage of justice and have been prima-facie guilty of 
abusing of the process of this Court and are liable to be 
prosecuted.”  
 
64. 
 
We have examined the pleas in both the applications and 
subject to the illegalities and irregularities, which have been noticed in 
the RPPs’ contracts, we are not inclined to issue contempt notice.  It is 
evident from the orders passed on different dates that at that time the 
sponsors had not resisted the return of the down payment. Moreover, 
without prejudice to the case of GENCOs or the Techno E. Power, 
suffice it to observe that contempt proceedings are always drawn 
when there is a violation of the Court order, or the authority of the 
Court is undermined or ridiculed, etc. Thus, in absence of any such 
allegations, both the applications are dismissed.   
HRC 7734-G/09 
[RPPs case] 
74 
65. 
 
In respect of Techno E. Power, another CMA has been 
filed, which indicates that a writ petition is pending on behalf of the 
applicant (sponsor) before the High Court. This project has been 
examined on the touchstone of the above illegalities and irregularities 
in awarding the contract, and we are of the opinion that this 
transaction has also not been undertaken transparently, therefore, 
subject to all just exceptions, no order in favour of the applicant 
(sponsor) can be passed.  
RECOVERY FROM M/S YOUNG GEN 
 
66. 
 
It is to be noted that Khawaja Ahmed Tariq Rahim stated 
that after the recovery of advance payment from Guddu and Naudero-
II, PEPCO had recovered US$ 1.26 billion from Ms Young Gen (a 
solicited RPP) by getting encashed its bank guarantee during the 
pendency of these proceedings on account of its failure to achieve COD 
within the stipulated time.  
FEASIBILITY STUDY 
 
67. 
 
The necessity in introducing the concept of RPPs is 
apparent from the facts that in the year 2006 when the then 
Government decided to adopt the phenomenon of rental power 
projects, no feasibility study was carried out which is crucial because 
study is based on the input of the experts on the subject to determine 
whether or not the implementation of the project is advisable. It is well 
known that feasibility study is based on the extensive research to 
ascertain that what would be the impact of such a project in terms of 
costs of the project, its results, future prospects, operational 
implications, advantages and disadvantages, keeping in view the 
situation like alleged shortage of electricity. The Government had 
formulated energy policies in the years 1994-2002 on the basis 
HRC 7734-G/09 
[RPPs case] 
75 
whereof IPPs were installed, therefore, had the Government allowed 
the experts on the subject of electric energy/power to examine merits 
and demerits of introducing the RPP regime, it would have helped in 
implementing the Rental Power Projects in a highly transparent 
manner. It is a fact that during the previous regime, Rental Power 
Projects 
were 
installed 
at 
Sharaqpur 
and 
Bhikki 
on 
the 
recommendation of WAPDA. Though it is stated that tender notices 
were issued in the newspapers, but no response was received, 
however, copies of such notices have not been made available on 
record. Further, it is alleged that decision to install RPPs was based on 
the recommendations of ECC dated 16.08.2006 in the case No.ECC-
135/9/06, contents whereof have been reproduced hereinabove, but it 
pertained to 150 MW at Piranghaib, Multan, and subsequent thereto 
another project on the same site for 192 MW was approved contrary to 
the PPRA Rules (detailed discussion has been made hereinabove) and 
the same was signed off, which caused considerable loss to the public 
exchequer.  
68. 
 
It is to be noted that when incumbent regime came into 
power, a meeting was held in the Prime Minister Secretariat on 
27.03.2008 wherein it was decided, inter alia, that PEPCO would 
arrange installation of fast track Rental Power Projects of up to 1067 
MW, which were subsequently increased to 2257 MW, but according to 
the report of ADB, it was reduced to 1257 MW. Apparently, this 
decision was taken without any feasibility study.  
69. 
 
When we talk about the importance of the feasibility study 
it also includes that the Government would have ascertained as to 
whether there is any necessity of rental power projects to enhance its 
capacity when allegedly PEPCO already possessed sufficient capability 
HRC 7734-G/09 
[RPPs case] 
76 
to generate electricity as per existing installed capacity, from other 
sources.   
FINANCIAL ASSISTANCE 
70. 
  
Makhdoom Syed Faisal Hayat and Khwaja Muhammad Asif, 
petitioners seriously questioned the transparency in awarding the 
projects of RPPs and vehemently agitated that in terms of clause 2.3 
of Request For Proposal (RFP) of Fast Track Rental Power Projects 
through ICB, the bidders/sponsors were solely responsible for 
financing of the projects, whereas, while issuing Letter of Award, they 
were made eligible to obtain, in advance, a down payment in US 
dollars equal to 7% of the lump sum contract price for the term of 
Rental Services Contract  on submission of a bank guarantee. This 
condition was reiterated in clause 4.5(a) in Rental Services Contract. 
In addition to it, another concession of provision of Standby Letter of 
Credit in the amount equal to 36-60 monthly rental services fee 
payments, as the case may be, in a form acceptable to the seller was 
made and the term of the same was to be started with the commercial 
operation date. Due to this reason, original terms and conditions had 
changed financial situation in favour of sellers and without getting the 
required results huge amount has been dolled out to them.  
71. 
  
Khwaja Ahmad Tariq Rahim, learned Sr. ASC and Raja 
Parvez Ashraf, former Minister for Water & Power and his counsel Mr. 
Wasim Sajjad, as well as other learned counsel, i.e., M/s Muhammad 
Akram Sheikh, Ali Zafar and Raja Anwar-ul-Haq submitted that PEPRA 
Rules were duly followed in awarding the projects to the sponsors and 
the Asian Development Bank had not pointed out any violation of the 
same. They further contended that as far as increase in down payment 
from 7% to 14% is concerned, it is a norm and practice in 
HRC 7734-G/09 
[RPPs case] 
77 
international commercial contracts i.e. FIDIC, ICE, ENAA, etc. They 
also explained that the previous Government had floated the idea of 
RPPs to overcome the difficulties of the shortage of electricity, using 
the same as a strategic tool and the present Government also 
considered the same useful for the purpose of catering the 
requirement of electricity for the general public.  
72. 
 
Khwaja Ahmad Tariq Rahim, Sr. ASC as well as the former 
Minister further contended that as per Rental Service Contract the 
power generation companies (GENCOs) were to deliver to the seller an 
irrevocable Standby Letter of Credit (SBLC) for rental period of 36 to 
60 months and subsequently it was realized that the foreign banks 
were not willing to provide SBLC unless charges amounting to 35% of 
total rental value for 5 years’ term were paid to the banks. Therefore, 
Ministry of Water & Power in consonance with the RSC submitted 
summary dated 11.10.2008 urging the Government to provide SBLC 
for the Rental Projects, but the Ministry of Finance expressed its 
inability to accept the proposal because of the financial constraints of 
the Government at that time and financial meltdown worldwide. For 
such reason, the Ministry of Finance headed by Mr. Shaukat Tareen 
replaced the provision of SBLC with additional 7% mobilization 
advance, which, after COD, was recoverable from the rental charges 
each month to be paid to the consultants and under the circumstances 
7% advance was secured by advance payment guarantee in the 
equivalent amount, additional 7% was disbursed through security and 
financial arrangements made by the Ministry of Finance through 
banking consortium set up by them. Since the advance payments were 
arranged by obtaining loans repayable with mark up, as such, a huge 
amount has to be returned. Thus, argument of savings made by the 
HRC 7734-G/09 
[RPPs case] 
78 
Government on this account, as has been quantified at Rs.26 billion, 
therefore, the step was clearly in the national interest is not 
acceptable.  
73. 
 
It is to be seen that in view of the above discussion on the 
question of responsibility of making arrangements by the bidders and 
succeeding therein without altering the terms & conditions of the 
advertisement, 7% down payment on the total rental value of 36 to 60 
months was subsequently increased to 14% for extending financial 
facilities, thus what would be its financial impact on the projects? It 
may be noted that it was the responsibility of the sellers to finance the 
projects at their own and also to pay withholding tax, customs duty 
etc. to the Government on the import of the machinery in accordance 
with law. However, the machinery was imported in the name of the 
GENCOs/Government. In addition to it, payment of 6% withholding tax 
was also deferred and in this manner, benefit of 14% + 6% = 20% 
was given to the bidders without any legal justification. Similarly, the 
machinery was allowed to be imported temporarily subject to getting 
exemption from payment of customs duty. All these conditions, if 
incorporated in the invitation for bids, would have encouraged more 
competition amongst the bidders to come forward and participate in 
the bidding process. Thus, in absence of competition between the 
bidders, public exchequer sustained huge losses and was likely to 
continue to suffer further losses in future, if curative measures are not 
adopted.  
74. 
 
Surprisingly, RFP along with LOAs were issued by the PPIB, 
whereas RSCs were executed between by GENCOs. As per Para 2.3 of 
RFP, the bidders/sponsors were solely responsible for the financing of 
the project and no incentive of down-payment was given on behalf of 
HRC 7734-G/09 
[RPPs case] 
79 
GENCOs. For the first time in the LOA incentive of 7% of down 
payment was divulged by PPIB. In this very context, it is to be noted 
that as per Paras 5.3 and 5.4 of the RSC, following extraordinary 
facilities were also extended to the sellers:- 
“4.5 Payment Terms and establishment of Letter of Credit- 
a. 
the SELLER is eligible to obtain in advance a Down Payment 
amounting to US$ [_______] i.e. 7% of Lump Sum Contract 
Price for the Term of the Rental Services Contract (the 
“Down Payment”), on submission of a bank guarantee valid 
until 30 days after the Target Commercial Operations Date, 
in a form “A”. the aforesaid Down Payment amount of 
US$[________]shall 
be 
deducted, 
in 
[36-60] 
equal 
installments of US$ [_______] each, from the monthly rent 
payable to the SELLER by the Buyer. Buyer shall release 7% 
Down Payment to be paid within ten (10) Days after 
submission of Advance Payment Bank Guarantee by the 
SELLER within five (5) days from the date of signing of this 
Contract. 
b.  The Lump Sum Contract Price as defined in Section 4.1 less 
the 7% Down Payment will be divided into [thirty six –sixty] 
(36-60) equal installments (the “Monthly Rental Services 
Fees”) . From and after the occurrence of Commercial 
Operation Date, the SELLER shall submit an invoice to BUYER 
for Monthly Rental Service Fee payment, on the 15th Day of 
each Rental Month. Upon confirmation by BUYER of the 
amount payable against such invoice net of any disputed 
amount, if any, to the operating bank issuing the ‘Letter of 
Credit’ the SELLER shall draw on the ‘Letter of Credit’, for 
such confirmed amount as anytime on 30th Day or next 
business Day thereafter, following the Day the invoice is 
delivered to BUYER.” 
 
75. 
 
Initially, 7% down payment had to be made on contract 
price for the term of Rental Service Contract, i.e. 36 to 60 months, 
against a bank guarantee. We have to observe that transparency of 
contract is not limited to the extent of following the PPR Rules as at 
the same time it is also to be seen whether an unusual financial 
concession is being given to the bidders due to which whole 
complexion of the contract would be changed. Interestingly, as per 
LOA issued by PPIB, there is no indication that which agency will 
advance down payment of 7% as ultimately GENCOs had to arrange 
this amount from banks on the basis of mark up. Legally GENCOs 
could not be bound down to arrange payment of 7% down payment, 
HRC 7734-G/09 
[RPPs case] 
80 
as bids were not invited by GENCOs. No such concession was agreed 
by GENCOs; inasmuch as the GENCOs had not issued LOA. Similarly, 
in RFP on behalf of GENCOs such assurance was never given. Thus, 
imposing such condition on GENCOs to accommodate bidders is 
against the transparency of the contract. As far as status of GENCOs is 
concerned, it is a government company but has its own entity and 
perpetual seal, thus, inescapable conclusion can be drawn that 
concession of financial assistance under the circumstances to bidder is 
nothing but a favour which had made bid process as non-transparent.    
76. 
  
According to the report of Federal Board of Revenue, the 
Ministry of Water & Power requested for exemption of customs duty on 
temporary import of power generation plants and the request so made 
by WAPDA was approved by the Cabinet. Subsequently this concession 
was incorporated as part of the Financial Bill, 2008. Accordingly, the 
machinery for Power Generation Plants was exempted from whole of 
the customs duty by adding Entry No.49 in exemption notification 
namely SRO No.567(1)/2006 dated 05.06.2006. In view of above 
notification WAPDA has got cleared following Power Plants on availing 
the concession of consumption on duty and taxes:- 
(1) 
Sammundri Rental Power Project (RPP). 
(2) 
Reshma Rental Power Project (RPP). 
(3) 
Gulf Rental Power Project (RPP). 
(4) 
Guddu Rental Power Project (RPP). 
(5) 
Naudero-I Rental Power Project (RPP). 
(6) 
Sahuwal Rental Power Project (RPP) 
(7) 
Karkay Rental Power Project (RPP). 
(8) 
Sheikhupura Rental Power Project (RPP) (Re-exported). 
(9) 
Bhikki Rental Power Project (RPP) (Re-exported.) 
 
As per summary, the amount to be paid on the above plants comes to 
approximately Rs.410,163,668/-, 
which includes 
customs 
duty, 
CED/FED as well as taxes. It has never been heard that in the business 
of providing motorcars/machinery, etc., on rent, the providers are 
HRC 7734-G/09 
[RPPs case] 
81 
extended the concession to the extent noted hereinabove. Not only the 
above concession, but as it has been noted during reply of the 
arguments made on behalf of above respondents that the Finance 
Minister due to non-providing Standby Letter of Credit, unilaterally 
increased 7% down payment in the name of mobilization advance.   
77. 
  
It is to be noted that when the bidder has been made 
responsible to make an arrangement for the finances, in absence of 
any commitment, during the contracting period, what was the 
necessity to increase 7% of Rental Value on the pretext that no foreign 
bank was agreeing to issue Standby Letter of Credit. Providing of 
Standby Letter of Credit, in fact, is making the payment in advance of 
Rental Services Charges/fee which was to be adjusted for the whole 
period, for which contract has been executed. It clearly indicates that 
such clauses were incorporated with no intention except to extend 
maximum financial benefit to the bidders. Raja Parvez Ashraf, former 
Minister, however, explained that foreign banks were not willing to 
confirm SBLC unless charges amounting to 35% of the total Rental 
Value for 5 years term were paid to them. Arguments on behalf of the 
respondents that in the interest of nation the conditions of the contract 
were changed and under the advice of the then Finance Ministry 
headed by Mr. Shaukat Tareen, the initiative for substitution of SBLC 
with additional 7% mobilization advance, recoverable/adjustable from 
the Rental Charges for each month was taken, seems to be unfounded. 
As it has been explained hereinabove, bidders while submitting bids as 
per the contents of RFP are required to furnish as many as 13 
Proformas in Envelopes I and II. A careful perusal thereof indicates 
that bidders never demanded for the concessions, which had been 
extended to them voluntarily.  
HRC 7734-G/09 
[RPPs case] 
82 
78. 
 
Next question for consideration is that how much amount 
was paid to sponsors by way of 7% + 7% = 14%. Since there were a 
lot of complaints of corruption in awarding contracts of RPPs against all 
concerned, individually and collectively, therefore, Ministry of Finance 
went for 3rd Party Evaluation/Audit and to achieve the object, ADB was 
appointed to do the needful. The ADB report reveals that enhancement 
of down payment from 7% to 14% could not be allowed without 
inviting fresh biddings and changing the terms of the contract with a 
view to ensuring fair competition amongst the bidders. We have 
already emphasized on this aspect of the case, and we see no reason 
to differ with the submission made by the petitioners that there were 
illegalities committed by Government in making payment of 14% 
advance 
to 
the 
bidders, 
particularly, 
when 
there 
was 
no 
commitment/agreement at the time of notifying the bids/issuing RFPs. 
Admittedly, this report was accepted and in pursuance thereof, 9 RPPs 
were allowed to continue.    
79. 
 
It is to be seen that 14% advance amount paid to the 
bidders on the basis of reference value runs into billions of rupees, 
details whereof are as under: -   
Name of RPP  
Amount 
of 
advance 
payment 
Date of advance 
payment 
Techno, Sammundri 
Road Faisalabad 
US$ 18.96 M 
26.02.2008 (7%) 
01.04.2009 (7%) 
PPR, Guddu, Sindh 
US$ 10.15 M 
17.03.2008 (7%) 
12.03.2009 (7%) 
Techno, 
Sahuwal 
Sialkot 
US$ 11.5 M 
04.06.2008 (7%) 
Karkay Karadeniz 
US$ 79.05 M 
12.05.2009 (14%) 
Young Gen, Satiana 
Road, Faisalabad 
US$ 15.56 M 
29.05.2009 (7%) 
23.06.2009 (7%) 
Gulf, 
Eminabad 
Gujranwala 
US$ 11.9 M 
19.09.2009 (14%) 
Reshma, 
Raiwind 
Road, Lahore 
US$ 55.27 M 
03.10.2009 (14%) 
Walters, Naudero-I 
US$ 11.26 M 
16.11.2009 (14%) 
Walters, Naudero-II 
US$ 9.93 M 
06.04.2010 (14%) 
Total  
US$ 223.58 M 
 
HRC 7734-G/09 
[RPPs case] 
83 
 
80. 
 
The petitioners have contended that a meagre amount of 
electricity is being generated through the medium of RPPs, although 
billions of rupees have been spent on these projects. The learned 
counsel appearing for the Government/WAPDA/PEPCO/GENCOs have 
not been able to rebut the contention raised by the petitioners. It is an 
admitted position that after spending billions of rupees in the shape of 
7% to 14% down payment and exemption from payment of customs 
duty as well as 6% withholding tax, against average cost of Rs.24/- 
per unit kWh [Karkey: Rs.35/- to Rs.50/-; Gulf: Rs.18/- to Rs.19/- and 
Naudero-I: Rs.12/- to Rs.19/-], only 120 MW electricity is being 
generated by the RPPs and its cost is on a very high side and is not in 
accordance with the provisions of section 7 of the Act, 1997 whereby 
NEPRA is required to protect the interests of the consumers. Therefore, 
RPPs’ mode of electricity generation has proved a total failure and 
incapable of filling the gap in the demand and supply on a short term 
basis. Further, this cost is not final, rather it is subject to fuel cost 
component and other charges of overhead transmission payable to 
NTDC, whereas it is the constitutional requirement that every action of 
Governmental 
authorities 
should 
be 
aimed 
at 
socio-economic 
development of the country. In this behalf, a chart showing average 
production of electricity vis-à-vis the maximum capacity and the 
advance payment is given below: -  
Name of RPP 
Total 
Rental 
Value / 
Rental 
Term (in 
Years) 
Monthly 
Rental 
Value  
(M US$)  
(in Pak Rs. 
@ 80) 
Maximum 
Capacity  
Average 
Price at 
Maximum 
Capacity 
US$ 
Average 
Monthly 
Production 
MW 
Monthly Price 
per MW (US$) 
KARKEY 
231.8 MW 
US$ 564.64 
/5 
US$ 9.41 M 
Rs.752.85 M 
231 MW 
US$ 40,735  
Rs.3.26 M 
48.33 
US$ 2,173,210 
Rs.173.85 M 
GULF 
Eminabad, 
Gujranwala 
US$ 85.00 
/5 
US$ 1.42 M 
Rs.113.6 M 
62 MW 
US$ 22,903  
Rs.1.83 M 
50.08 
US$ 28,354 
Rs.2.268 M 
NAUDERO-I 
51 MW 
US$ 80.42 
/5 
US$ 1.34 M 
Rs.107.2 M 
51 MW 
US$ 26,274  
Rs.2.10 M  
9.16 
US$ 146,288 
Rs.11.70 M 
Reshma 201 
MW 
US$ 394.78 
/5 
US$ 6.58 M 
Rs.526.37 M 
201.3 MW 
US$ 32,687 
Rs.2.61 M 
14.57 
US$ 451,612 
Rs.36.13 M 
HRC 7734-G/09 
[RPPs case] 
84 
Techno E-
Power 
Sammundri 
Road, 
Faisalabad 
US$ 135.00 
/3 
US$ 3.75 M 
Rs.300.0 M 
150 MW 
US$ 25,000  
Rs.2.0 M 
0 
-- 
Guddu 
110 MW 
US$ 72.48 
/3 
US$ 2.01 M 
Rs.161.07 M 
110 MW 
US$ 18,272  
Rs.1.46 M 
-- 
-- 
Techno 
Energy (Pvt.) 
Ltd. Sahuwal, 
Sialkot 
US$ 165 
/4 
US$ 3.44 M 
Rs.275.0 M 
150 MW 
US$ 22,933  
Rs.1.83 M 
-- 
-- 
Naudero-II  
US$ 70.96 / 
5 
US$ 1.18 M 
Rs.94.61 M 
45 MW 
US$ 26,288  
Rs.2.10 M 
-- 
-- 
Young Gen 
200 MW 
US$ 111.15 
 /  
 
200 MW 
 
-- 
-- 
Independent 
Power (Pvt.) 
Ltd. 
US$ 432.21  
/5 
US$ 7.20 M 
Rs.576.28 M 
200 MW 
US$ 36,000  
Rs.2.88 M 
-- 
-- 
Sialkot 
Rental Power 
US$ 112  
/5 
US$ 1.87 M 
Rs.149.33 M 
65 MW 
US$ 28,789 
M 
Rs.2.30 M 
-- 
-- 
Premier 
Energy (Pvt.) 
Ltd. 
US$ 111.86  
/5 
US$ 1.86 M 
Rs.149.15 M 
57.8 MW 
US$ 32,180  
Rs.2.57 M 
-- 
-- 
Ruba Energy 
US$ 305.7  
/5 
US$ 5.09 M 
Rs.407.60 M  
155.5 MW 
US$ 32,208  
Rs.2.62 M 
-- 
-- 
Consortium 
of Tapal 
US$ 143.90 
/5 
US$ 1.87 M 
Rs.149.33 M 
70 MW 
US$ 26,714  
Rs.2.14 M 
-- 
-- 
Walters 
Power 
International 
US$ 325.91  
/5 
US$ 5.43 M 
Rs.434.55 M 
325.9 MW 
US$ 16,667  
Rs.1.33 M 
-- 
-- 
Techo E. 
Power, 
Sammundri 
Road, 
Faisalabad 
(Extension) 
US$ 135  
/3 
US$ 3.75 M 
Rs.300.0 M 
150 MW 
US$ 25,000  
Rs.2.0 M 
-- 
-- 
Karkey 
(Extension) 
 
US$ 333  
/5 
US$ 5.55 M 
Rs.444.0 M 
222 MW 
US$ 25,000  
Rs.2.0 M 
-- 
-- 
 
81. 
 
Thus, all the Government functionaries, including the 
Ministers for Water & Power holding charge from 2006 and onward up 
to 2008 during whose tenure the RPPs were approved/set up, prima 
facie, 
violated 
the 
principle 
of 
transparency, 
therefore, 
their 
involvement in getting financial benefits out of the same by indulging 
in corruption and corrupt practices cannot be overruled in view of the 
discussion made hereinabove. Consequently, they are liable to be dealt 
with under the National Accountability Ordinance, 1999 by the NAB. 
Similarly, all the functionaries of PEPCO, GENCOs and NEPRA along 
with sponsors who had derived financial benefits from the RPPs 
HRC 7734-G/09 
[RPPs case] 
85 
contracts are, prima facie, involved in corruption and corrupt practices, 
therefore, they are liable both for the civil and criminal action.   
82. 
 
In conclusion, it may be mentioned that Bhikki RPP was 
paid Rs.8,698.46 million against 811.605 mkWh electricity whereas 
Sharaqpur RPP was paid Rs.13,941.82 million against 1520.420 mkWh 
electricity.  As regards the RPPs set up since 2008, out of nine RPPs to 
whom advance payments were made, six RPPs, namely, Techno 
Sahuwal, Guddu, Reshma, Young Gen, Naudero-II and Techno 
Sammundri have returned the advance payments in pursuance of 
orders passed by this Court from time to time, whereas the advance 
payments made to Karkey, Gulf and Naudero-I have not so far been 
returned. Despite down payment of billions of rupees to the RPPs, 
Karkey is generating 48.33 MW against capacity of 231 MW and 
Naudero-I is generating 9.16 MW against capacity of 51 MW; whereas, 
Gulf is generating 50.08 MW against capacity of 62 MW. Pakistan 
Power Resources (Piranghaib, Multan) did not generate electricity at all 
although down payment of US$ 14.58 million was made to it, which 
has not been returned. Though Reshma has returned the down 
payment, according to learned counsel, yet it is still functioning and 
generating 15 MW only against capacity of 201.3 MW. Per unit cost of 
electricity produced by the RPPs is on very high side, e.g., Karkey is 
ranging from Rs.35/- to Rs.50/-; Gulf from Rs.18/- to Rs.19/- and 
Naudero-I from Rs.12/- to Rs.19/- whereas as per decision of the ECC 
dated 10.09.2008, efforts were to be made that the tariff of the RPPs 
is lower than that of the IPPs based on similar technology for their first 
10 years. Thus, in this manner, the decisions of the ECC have also 
been violated blatantly. All the RPPs are collectively generating just 
120 MW of electricity. Huge amount has been paid to Karkey, Gulf and 
HRC 7734-G/09 
[RPPs case] 
86 
Naudero-I and if they are allowed to continue for the left over term, 
further huge amounts would be paid to them at the expense of the 
public exchequer with no corresponding benefit to the consumers. As 
already discussed in detail, while awarding contracts to RPPs, 
particularly Gulf, Karkey, Reshma, Naudero-I, Naudero-II, Bhikki and 
Sharaqpur grave illegalities and irregularities were committed, and 
procedural lapses and deviations were made from mandatory legal 
requirements and the same were entered in a non-transparent 
manner.  
83. 
 
In pursuance of the orders passed by this Court from time 
to time, a sum of Rs.8,689,224,000/- (rupees 8 billion 689 million 224 
thousand) has been recovered from the RPPs on account of advance 
payments and interest, whereas, proceedings for recovery of interest 
amounting to Rs.445,496,000/- (rupees 445 million 496 thousand) 
from Young Gen and the interest from Reshma, are still pending, 
details whereof are given as under:-  
 
S. No 
Name of the 
RPP/capacity 
Amount 
of 
Advance 
payment 
and 
date 
Amount 
recovered and 
date  
Interest 
recovered  
1.  
TECHNO, 
SAHUWAL/ 150 
MW  
Rs.782000000/- 
on 04.06.2008 
Rs.782000000/- 
on 18.01.2011 
Rs.298000000/- 
2. 
GUDDU / 110 
MW 
Rs.301058000/- 
on 17.03.2008 
 
Rs.405902000/- 
on 12.03.2009 
Rs.301058000/- 
on 08.12.2010 
 
Rs.405902000/- 
on 04.12.2010 
Rs.120000000/- 
3.  
RESHMA/ 201.3 
MW 
Rs.4576272000/- 
on 03.10.2009 
Rs.4576272000/
- on 18.11.2011 
Notice served 
4.  
YOUNG 
GEN/ 
200 MW 
Rs.628686000/- 
on 01.06.2009 
 
Rs.630928000/- 
on 23.06.2009 
Rs.628686000/- 
on 29.12.2010 
 
Rs.630928000/- 
on  
Notice 
for 
recovery 
of 
Rs.445496000/- 
served 
on 
08.01.2011 
5.  
NAUDERO-II/ 
50 MW 
Rs.930942000/- 
on 06.04.2010 
Rs.930942000/- 
on 08.12.02010 
Rs.15436000/- 
            Total:                                       Rs.8255788000/-  Rs.433436000/- 
HRC 7734-G/09 
[RPPs case] 
87 
84. 
 
Thus, in the light of the above facts and circumstances, we 
hold as under: -   
(i) 
Prior to the introduction of RPPs, the system of generation 
of electricity under the control and management of 
Ministry of Water & Power, WAPDA, PEPCO, GENCOs, etc., 
had sufficient potential to produce more electricity, but 
instead of taking curative steps for its improvement, 
including clearance of circular debt of the IPPs or resorting 
to other means of generation of electricity, billions of 
rupees were spent on BHIKKI and SHARAQPUR RPPs, 
which proved complete failure because the object could not 
be achieved as the shortage of electricity persistently 
continued, and yet more RPPs were installed;  
(ii) 
The 
Federal 
Government/WAPDA/PEPCO/GENCOs 
had 
failed to control pilferage of electricity from the system 
because of bad governance and failure of the relevant 
authorities to enforce the writ of the Government. 
Therefore, the Government is required to improve the 
existing 
system 
of 
generation 
and 
transmission 
of 
electricity, by taking all necessary steps, including clearing 
of circular debt, etc., so that electricity can be generated 
to the maximum capacity;  
(iii) 
The contracts of all the RPPs – solicited and unsolicited, 
signed 
off 
or 
operational, 
right 
from 
BHIKKI 
& 
SHARAQPUR 
upto 
PIRANGHAIB, 
NAUDERO-I 
& 
NAUDERO-II were entered into in contravention of 
law/PPRA Rules, which, besides suffering from other 
irregularities, violated the principle of transparency and 
fair and open competition, therefore, the same are 
declared to be non-transparent, illegal and void ab initio. 
Consequently, the contracts of RPPs are ordered to be 
rescinded forthwith and all the persons responsible for the 
same are liable to be dealt with for civil and criminal action 
in accordance with law;    
(iv) 
On accepting the ADB’s report, 9 out of 19 RPPs were 
allowed to operate, details whereof have been mentioned 
hereinbefore. Subsequently, 6 out of 9 RPPs were 
HRC 7734-G/09 
[RPPs case] 
88 
discontinued either having been signed off or having failed 
to achieve the target COD whereas remaining RPPs, i.e., 
KARKEY, NAUDERO-I and GULF are functioning, but 
they are producing electricity much less than their 
generation capacity, except GULF which is producing 
electricity close to the agreed capacity. PPR (Piranghaib, 
Multan) has not generated electricity at all, although 
down payment was made to it, which has not been 
returned. As far as RESHMA is concerned, though it 
achieved partial COD, but the same was not accepted by 
NEPRA. BHIKKI and SHARAQPUR were paid exorbitant 
rentals in billions of rupees, but generation of electricity 
was much below the agreed capacity;  
(v) 
The production from the RPPs is far below the maximum 
capacity agreed between the parties as per the terms of 
the RSCs, which is evident from the above charts. The cost 
per unit kWh is also on the very high side. These RPPs 
have not achieved target COD. The contracts of all these 
RPPs are not transparent, as it has been discussed 
hereinabove, therefore, the same are hereby ordered to be 
rescinded forthwith;  
(vi) 
The Ministry of Finance, WAPDA, PEPCO as well as GENCOs 
are responsible for causing huge losses to the public 
exchequer, which run into billions of rupees by making 7% 
to 14% down payments to, and purchasing electricity on 
higher rates, from RPPs, therefore, steps are required to 
be taken to effect recovery of the amounts with mark up 
outstanding against the RPPs whose contracts have been 
signed off or who had failed to achieve COD within the 
stipulated time in terms of the performance guarantees;   
(vii) The RPPs mode of generation of electricity has proved a 
total failure and incapable of meeting the demand of 
electricity on a short term basis. The cost of electricity so 
produced is on very high side and is not commensurate 
with the provisions of section 7 of the Act, 1997. As per 
latest report, KARKEY and GULF are producing only 31 to 
81 MW and 51 to 61 MW at an average cost per unit 
kWh of Rs.35/- to Rs.52/- and Rs.18/- to Rs.19/- 
HRC 7734-G/09 
[RPPs case] 
89 
rupees respectively, as per information supplied in 
October/November, 2011, which also are subject to 
adjustment of fuel cost component and NTDC overhead 
transmission charges on account of which prices are likely 
to increase enormously. Thus, it is clear violation of the 
rights guaranteed to the citizens in terms of Articles 9 & 24 
of 
Constitution 
and 
the 
Regulation 
of 
Generation, 
Transmission and Distribution of Power Act, 1997;  
(viii) It is the constitutional requirement that every action of 
Governmental authorities should be aimed at socio-
economic development of the country. In terms of 
Constitution and Act, 1997, the NEPRA is mandated to 
safeguard the interests of the consumers, but the 
concerned officials of NEPRA failed to perform their duties 
diligently;    
(ix) 
All the Government functionaries, including the Ministers 
for Water & Power holding charge in 2006 and onward and 
from 2008 to onward, during whose tenure the RPPs were 
approved/set up and Minister as well as Secretary Finance 
holding the charge when the down payment was increased 
from 7% to 14%,  prima facie, violated the principle of 
transparency under Articles 9 & 24 of the Constitution and 
section 7 of the Act, 1997, therefore, their involvement in 
getting financial benefits out of the same by indulging in 
corruption and corrupt practices cannot be overruled in 
view of the discussion made hereinabove. Consequently, 
they are liable to be dealt with under the National 
Accountability Ordinance, 1999 by the NAB;   
(x) 
All the functionaries of PEPCO, GENCOs, PPIB and NEPRA 
along with sponsors (successful bidders) who had derived 
financial benefits from the RPPs contracts are, prima facie, 
involved in corruption and corrupt practices, therefore, 
they are also liable both for the civil and criminal action; 
and  
(xi) 
The Chairman NAB is directed to proceed against all the 
persons referred to in subparagraphs (iii), (ix) & (x) above 
forthwith in accordance with law and submit fortnightly 
progress report to Registrar for our perusal in Chambers.  
HRC 7734-G/09 
[RPPs case] 
90 
 
85.   
Before parting with the judgment, we would like to place 
on record our appreciation of the valuable assistance provided during 
the hearing of the case by the learned counsel appearing for the 
parties and learned Amicus Curiae.   
 
 
The role of the petitioners, Makhdoom Syed Faisal Saleh 
Hayat, Federal Minister for Housing & Works and Khwaja Muhammad 
Asif, MNA is also laudable; they being the holders of public offices, 
highlighted the instant scam of corruption and corrupt practices and 
fulfilled their commitment to the Constitution as well as the general 
public whose rights enshrined in Articles 9 and 24 of the Constitution 
were being violated.  
 
 
  CHIEF JUSTICE 
 
 
JUDGE  
 
 
Announced in open Court on         2012 
at Islamabad.  
 
 
  CHIEF JUSTICE 
 
 
APPROVED FOR REPORTING