The Punjab government and China Power International Holdings (CPIH) have signed a Memorandum of Understanding (MoU) according to which the Chinese company has committed to setting up a coal-fired power plant capable of generating 2400MW, at Gadani, two units to be built in two years, the other two in three. While it may have been to show Chief Minister Mian Shahbaz’s commitment to the need for more power to end the energy shortage, it raised a number of questions which were also applicable to previous MoUs by the Punjab government, not just those signed in Lahore, but also those signed during his recent visit to China. According to legal experts, the MoUs have no legal value, because the rules of the Pakistan Public Procurement Authority mandate a process of competitive bidding, and thus the company which has signed the original MoU has no advantage.
According to a former Pepco official, none of the MoUs signed in China by President Asif Zardari materialized because of this, despite the raised expectations of the Chinese companies involved. Another problem is illustrated by the MoU agreement that the major investment would be made by CPIH, but the Punjab government also intends to participate. When the investor returns after several months, having carried out the feasibility, he is told to take part in the competitive bidding process.
This means that the Punjab government is making agreements outside its jurisdiction. It might be true, as Mian Shahbaz said, that the electricity produced would be allocated to the national grid, and thus used in the Punjab. However, two other provinces are involved. Mian Shahbaz is the Chief Minister, but he is behaving like a Deputy Prime Minister. No matter how well-intentioned, the example he is setting is an unhealthy one, of elected officials overstepping their bounds. The location of the plant is in Balochistan, where the PML-N is also in the government, but the coal will presumably come from Thar, which is in Sindh, where the PPP is in office. This would lend support to the view, expressed by legal experts, that the Punjab government must seek permission from the Council of Common Interests.
The federal government is already facing criticism for allowing Punjab to dominate too much. This is not only caused by Prime Minister Mian Nawaz Sharif hailing from the province, but because the PML-N won a majority in Parliament on the basis of a sweep of the province. The Punjab government must be careful not to do anything that might prove embarrassing and will be an overstepping of its constitutional limits on any issue, especially in view of the close relationship between Mian Nawaz and Mian Shahbaz.