ISLAMABAD - Public Procurement Regulatory Authority (PPRA) has declined permission to the government to adopt direct contracting mode for securing up to $25 billion foreign investment in the power sector for early resolution of chronic energy shortage.
Earlier, to spur heavy foreign investments in the power sector from international firms ostensibly for early resolution of incessant energy shortage, the water & power ministry devised Draft Framework for Implementation of Power Sector Projects in Pakistan under the provision of Rule 42 C (vi) of PPRA Rules 2004. The ministry dispatched the draft to the PPRA and ministries of law and finance for expert input but the law ministry did not give answer to the power ministry after passing many days and preferred to put up the matter in the court of PPRA to take a decision in this regard. However, governmental plan to get rid from ongoing energy crisis with heavy foreign investment ended in smoke with effect to the refusal of PPRA. The PPRA in a letter to water and power ministry on January 30 had prohibited the government to adopt direct contracting strategy for power sector projects and also advised the ministry of water & power to resort to open competition for attracting investors for power sector projects.
Available copy of PPRA’s letter sent to Water and Power Ministry said, “It is further noted that in the proposed mechanism, the investors will not be provided equal opportunity for submission of their proposals, which will be evaluated of technical and financial proposals.
“In the light of above, ministry of water and power is advised to resort to open competition for attracting investors to power sector projects,” PPRA letter reads.
Officials at water & power ministry said that the ministry would try to convince PPRA to permit direct contracting strategy under the provisions of PPRA Rules 2004 because the PPRA had stopped the government to implement its own rules.
“Prime minister would also be approached to present complaints against PPRA’s stance over the matter relating to bring heavy foreign investment in the power sector from international firms for early resolution of non-stop chronic energy crisis of the country,” a senior official at power ministry said, adding that some Chinese investors met with premier on Monday and have assured their willingness and readiness if direct contracting mode was adopted during the award of contracts for power sector projects.
It is to be noted here that Prime Minister Muhammad Nawaz Sharif has given his go-ahead on the matter and instructed to present the matter in the concerned forum for necessary approval. However, the government’s plan to get rid from prevailing severe energy crisis with foreign heavy investment in power sector has met with stumbling block due to the decline of PPRA.
The framework is said to draw its strength from the provisions of Rule 42 C (vi) of PPRA Rules 2004, which enables the public sector to enter into direct contracting. The said clause is general in nature that in fact applies to majority of items like electricity, all forms of natural gas, oil products and major infrastructure projects.
It says the procuring agency will enter into direct contracting “when the price of goods, services or works is fixed by the government or any other authority, agency or body duly authorised by the government on its behalf”.
“In order to address the issue and to expedite implementation of new projects of power generation and High Voltage Transmission Network a framework has been drafted,” said a summary of ministry of water & power available with The Nation.
It is worth mentioning here that the Public Procurement Regulatory Authority is an autonomous body endowed with the responsibility of prescribing regulations and procedures for public procurements by federal government owned public sector organizations with a view to improve governance, management, transparency, accountability and quality of public procurement of goods, works and services. It was also endowed with the responsibility of monitoring procurement by public sector agencies/organizations and has been delegated necessary powers under the Public Procurement Regulatory Authority Ordinance 2002.
Pakistan, for the last one decade, has continually been facing increasing shortfall of energy. Power loadshedding has become an unavoidable phenomenon. The widening gap between demand and supply has not only led to raise the discomfort level but also has hit the economy of the country badly.
There is no denying the fact that lot of interest has been and being shown by leading international companies and investors to take up projects in the power sector.