ISLAMABAD - Contraryo the report of Justice (Retd) Rehmat Hussain Jaffery Commission that Nandipur power project scam caused a loss of Rs113 billion, the National Accountability Bureau has informed the Supreme Court that the scam caused Rs27 billion loss to national exchequer due to delay and then non-issuance of legal opinion by the Ministry of Law and Justice.

Justice (Retd) Jaffery Commission had also held the law ministry responsible for the loss to the exchequer. The ministry at the time of commission of offence was led by Babar Awan, who is now leader of Pakistan Tehreek-e-Insaf.

NAB in its interim report has established that officers and officials of Ministry of Law and Justice failed to exercise their lawful authorities causing a loss of Rs27,292 million to the national exchequer.

“Hence they committed the offence (s) of corruption and corrupt practices as defines u/s 9 (a)(vi) and (xii) of the National Accountability Ordinance (NAO).”

NAB stated that the Ministry of Water and Power made repeated requests to the Law Ministry to issue the legal opinion but all in vain.

Hence, the finance agreement could not be executed due to conflict between the Ministry of Law and Justice and the Ministry of Water and Power, which caused a delay of more than two years in the execution of the agreement.

Chief Justice Mian Saqib Nisar on a petition of former foreign minister Khawaja Asif regarding delay in the Nandipur Project and outsourcing the same has already expressed displeasure over the delay in investigation into the Nandipur power project scam and lamented on the conduct of the NAB for not filing a reference against the accused. He had asked why the reference had not been filed against the persons responsible for the delay in the project.

According to NAB, the total loss due to non-issuance of legal opinion by the Ministry of Law and Justice in Nandipur power amounted to Rs27. 3 billion.  The Rs27.3 billion includes Rs20,008 million difference between PC-1 and revised PC-1 purely due top escalation cost and variation in exchange rate.  Rs4,367.5 million paid to M/s Dongfang Electric Corporation Ltd China under the heads of remobilisation & EOT cost and Repair, Replacement and Repacking. Rs2.19 million paid as amount of mark-up on loans and Rs718.1 million has been paid as demurrage and detention charges to the port authorities.

Prior to instant investigation, NAB conducted inquiry into the allegations of the outsourcing of Operation and Maintenance (O&M) of Nandipur Power plant to M/s HEPSEC China and award of O7M contract at exorbitant rate of Rs110 million per month, as compared to annual cost of O&M of WAPDA itself (Rs15.5 million/month), and previously a firm namely M/s Albano performed the O&M services at Rs30.5 million per month.

NAB said that record had also been requisitioned from Northern Power Generation Company Ltd, Securities and Exchange Commission of Pakistan (SECP) and Pakistan Engineering Council (PEC), adding that the investigation of subject matter was at advanced stage. Relevant record from the ministries concerned has been seized. Examination of witnesses and accused persons is under process, it further stated.

During the investigation it has been revealed that the finance agreements were signed, which stipulated certain inbuilt conditions/ precedents for the finance facilities to become effective.

 These preconditions also included issuance of legal opinion by the Ministry of Law & Justice and issuance of Sovereign Guarantee by the Ministry of Finance.

The relevant record shows that the Ministry of Water & Power approached the Ministry of Law & Justice with a request to clear third draft of SINSOURE.

In 2009 law ministry, in response, authorised Ministry of Water & Power and Ministry of Finance to make appropriate decision after obtaining knowledge of probable danger and keeping in view all the surrounding circumstances.

“Hence the PEPCO team visited China and signed SINOSURE credit facility agreement with some last minute changes as desired by the Exim Bank China.”

However, the last minute changes in SINOSURE neither had any financial implications nor did they bring any change in substance of the vetted agreement and the same facts were reflected in the Justice (Retd) Jaffery Commission’s Report, the report added.

In March 2009, the PEPCO requested the Ministry of Water & Power and Ministry of Finance to issue ex-post facto approval and for issuance of Government of Pakistan Guarantee as per format given in the agreement.

The Ministry of Finance requested the Ministry of Law & Justice to convey the comments/clearance to enable the Finance Division to proceed further.

“In fact, the Ministry of Finance never requested to the Ministry of Law and Justice for issuance of ex-post facto approval,” the report of NAB revealed.

NAB in its report also brought on record that that Ministry of Water & Power and the Ministry of Finance were already authorized by the Ministry of Law & Justice to take appropriate decision.

“However, later on the Ministry of Law & Justice refused to issue legal opinion on the false pretext that Ministry of Law & Justice did not vet the SINOSURE agreement and the Rules of Business 1973 do not allow to grant ex-post facto approval,” the report stated.