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VIEW FROM THE COURTROOM: Lack of transparency in award of hydropower project exposed.

Byline: Waseem Ahmad Shah

A recent judgment of the Peshawar High Court exposed lack of transparency in award of a hydropower project to a Korean company in Swat district. A bench of the high court on Nov 7 declared as illegal and unconstitutional a Memorandum of Understanding (MoU) signed between the Khyber Pakhtunkhwa government and Korean South East Power Company last year for establishing the 215-megawatt Asrit Kedam Hydropower Project on Swat river.

A few days ago the court released the detailed judgment wherein several reasons have been given for declaring the impugned MoU as illegal and contrary to the Khyber Pakhtunkhwa Hydropower Policy 2016.

The bench comprising Chief Justice Waqar Ahmad Seth and Justice Mohammad Ayub Khan also expressed reservations about the clandestine manner in which the MoU was signed without any bidding process, which was compulsory under the policy as well as for the sake of transparency.

The judgment was delivered in a writ petition filed by a company M/S YB Pakistan Limited, which had challenged the KP government's decision of handing over the project to the Korean company.

The court also declared as unconstitutional and illegal an amendment made in the Hydropower Policy 2016 so as to justify the said MoU signed by the KP government and Pakhtunkhwa Energy Development Organisation (Pedo). The bench ruled that the said amendment was non-transparent and discouraging to the concept of competitive bidding.

The petitioner, represented by Barrister Syed Mudasser Ameer, stated that the petitioner company, which is successor-in- interest of a company Yunus Brothers, had been operating various energy development projects in the country.

It is stated that on March 28, 2006, the Yunus Brothers had submitted a proposal to the Private Power and Infrastructure Board (PPIB), in anticipation of issuance of letter of interest (LOI) for award of contract for the establishment of the 215MW Asrit Kedam Hydropower Project.

It was stated that the PPIB finding the proposal of the petitioner viable on April 14, 2007, issued LOI for the project to the petitioner under which the petitioner was required to complete the feasibility study for the project for a period of 30 years within 24 months. Following the LOI, the petitioner conducted a feasibility study within one year for establishing the project.

The petitioner claimed that the feasibility study was evaluated by a panel of experts and based on their recommendations the same was later approved by the PPIB on Dec 29, 2008. The petitioner claimed that under the Power Policy, 2002, it was supposed to have applied for an inductive tariff to the Nepra within three months of the approval, but due to law and order situation as well as devastating flood the petitioner could not do so within time.

After the situation improved in 2014, Yunus Brothers signed a non-binding MoU and the company had submitted feasibility stage tariff petition in 2016. However, Nepra termed the feasibility conducted in 2008 outdated and asked the company to update the same.

The petitioner claimed that despite the fact that the company spent a lot of finances on the feasibility study the PPIB issued cancellation of the EOI to the company, but it was challenged in the Sindh High Court which issued restraining order against the cancellation and the matter had still been pending there.

Meanwhile, the Korean company entered into an MoU with the KP Ministry of Energy and PEDO under KP Hydropower Policy 2016 on May 15, 2017. The petitioner claimed that the said MoU was signed without any permission from the federal government under Article 157 of the Constitution.

The bench rules that 'electricity' is at serial No 4 of Part-2 of the Federal Legislative List and there is no permission, consultation or sanction of any advice by the Federal Government or PPIB for the purpose of construction of a hydroelectric station for the generation of electricity.

The court also ruled that the MoU so signed with the Korean company by the KP government, was without prior approval of the provincial cabinet, which was mandatory in the light of the Supreme Court Judgment in the Mustafa Impex case. It ruled that the record suggested that ex- post facto approval was obtained after signing the impugned MoU, on Sept 29, 2017.

'We clarified that an ex-post facto approval by the Cabinet will not suffice since money once spent cannot be unspent. Any provisions of the Rules of Business to the contrary are ultra vires since there is no constitutional provision to justify them.'

The bench ruled that a project with bankable feasibility had to go through international competitive bidding according to the law of the land and Para 1.5 of the KP Hydropower Policy 2016. It was added that before signing of MoU with the Korean company no advertisement, etc as required under the law in order to have transparency, was adopted.

The bench pointed out that as per SRO No. 275 (1)/ 2015, issued in pursuance of the decisions of Council of Common Interest Para 6.2 'where a designated provincial/AJK/GB, entity awards the project in accordance with their applicable laws and recommended to PPIB for their processing, the PPIB may process the project further under this policy.' The court ruled that the MoU so signed by the KP government was totally against the said SRO.

Exposing further illegalities in the MoU, the bench observed that the awarding of the contract was itself violation of the Hydropower Policy 2016 as in Clause 1.2 it was mentioned that the policy was to ensure fast track and transparent development of project, whereas signing of the impugned MoU without advertisement in a very discreet manner, without fulfilling the requirement of law was illegal.

'The apex court has time and again held that people of Pakistan were the ultimate owners of such natural resources through their government and state enterprises. Therefore, a fair, evenhanded and open competitive bidding was very important for the award of public contracts.'
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Publication:Dawn (Karachi, Pakistan)
Date:Dec 10, 2018
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