Wednesday Dec 04, 2019
ISLAMABAD: The federal cabinet on Tuesday decided to take action against the federal minister and secretary involved in the Karkey Rental Power Project case.
The settlement agreement of the Karkey project was presented before the cabinet meeting chaired by Prime Minister Imran Khan.
It is pertinent to mention here that Karkey Karadeniz Elektrik Uretin (KKEU) was one of 12 rental power companies that had been awarded contracts by the Pakistan Peoples Party (PPP) government in 2008-09 to ‘resolve’ the power crisis. The company failed to provide the required electricity and then they moved the International Centre for Settlement of Investment Disputes (ICSID) which imposed $1.2 billion penalty on Pakistan in 2017, which is now amicably resolved.
Due to Turkish President Recep Tayyip Erdogan's intervention, the fine worth $1.20 billion imposed on Pakistan was waived, the cabinet was told.
The cabinet was also informed that Pakistani officials involved in the Karkey Rental case have pleaded guilty, according to the sources. The cabinet was also briefed that action will be launched against the then federal minister and secretary involved in the case.
The government is all set to produce the report of irregularities committed in the Karkey project before the National Accountability Bureau, sources said. However, the action will not be initiated against foreigners involved in the case, in accordance with the agreement.
PPP leader Raja Pervez Ashraf was the federal minister for power and water at the time of the 2009 agreement. He was later elected as the country’s premier. Former secretary power and water Shahid Rafi was also arrested a few days back.
The PPP government had entered an agreement with Turkey to provide electricity in 2009 and awarded the contract to nine RPP firms (both local and international) for the purpose.
The Pakistan Electric Power Company (Pepco) working under the ministry of power and water signed a contract worth $564.6 million with a Turk company ‘Karkey’.
Under the agreement, a rental power project was installed in Karachi to supply 231 MW electricity to the PEPCO. However, the rental project failed to do so, given the fact the electricity was turning out to be costly to the country as the government had to pay $9.4 million monthly to the Turkish company.
On an application filed at the Supreme Court by the then Pakistan Muslim League-Quaid leader Faisal Saleh Hayat and Pakistan Muslim League-Nawaz leader Khawaja Asif, the court held the contract with the Turk company as null and void as there was no transparency maintained in it.
The contract was guaranteed by the government of Pakistan, that stirred the Turk company to move the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) over breach of the agreement. Pakistan lost the case in 2017 and was ordered to pay a total amount of approximately US$780 million (the “Award”), which carried an approximate monthly interest of US$ 5.5 million.