With the government all but admitting failure in the task, the Supreme Court was asked on Monday to declare the Power Generation Policy of 1994 as unconstitutional and thus reign in independent power producers (IPPs).
The request was filed by the Lahore High Court Bar Association (LHCBA), which further asked the top court to declare other relevant policies as unconstitutional; summon details of IPPs, including details of ownership and details of IPPs which do not generate any power in the country.
In its petition, the LHCBA argued that the unilateral agreements with IPPs were non-transparent, illegal, and un-Islamic, adding that providing expensive electricity to the public was a violation of Article 18 of the Constitution.
The petition contends that courts in the past have decided the principle of judicial review on policy matters that violate fundamental rights in the past.
The LHCBA listed the federal government, the Ministry of Water and Power, the Ministry of Energy and others as respondents in the petition.
"The plight of the people of Pakistan and the non-competitiveness of Pakistani businesses in the domestic and international markets all stem from the defective and unconstitutional energy policies over a period of time permitting unfair, unreasonable, unlawful, discriminatory and unworkable incentives and concessions, including payment to IPPs and the respondents and successive governments in Pakistan have failed to address the issues of higher electricity production costs and consequently the tariffs charged to consumers and have failed to successfully renegotiate and re-evaluate the terms and conditions of the PPAs, Implementation Agreements etc, with the IPPS all of which have been hidden from the public eye and scrutiny, although a template for Power Purchase Agreement available on the website of Respondent No. 8 is attached to this petition, and this court may graciously direct the relevant respondents to disclose to, and file such agreements with this court and the petitioners, and therefore, the judicial intervention to correct and remedy such issues, which raise, questions of public importance with reference to the enforcement of fundamental rights is necessary," stated the petition.
The petitioner sought a judicial review of the government's energy policies, the acts or lack of acts of the respondents and the contracts entered into by the respondents with IPPs.
"It is respectfully submitted that while party(ies) to an agreement are free to negotiate the terms and conditions, however, over a period of time, throughout the world, laws, regulations, and jurisprudence have emerged that the terms agreed by the parties to a contract, particularly contracts involving the private sector and government, government institutions and bodies must be fair, reasonable, lawful, unbiased, based on bonafides and must be non-discriminatory."
The LHCBA submitted that since the problem of capacity payments, higher costs of input and fuels, which are environmentally unfriendly, payments to IPPs that are shut down and/or are incapable of production have the effect of crippling the people and the businesses of Pakistan all raise questions of public importance with reference to enforcement of fundamental rights.
The petition further contended that guaranteed capacity payments without any input costs (and without any electricity production) are unfair, unreasonable, lack bonafides and transparency, while the capacity charges payment clauses in PPAs are, to that extent, void ab initio.
"It is respectfully submitted that the government and/or relevant respondents cannot bind consumers without their consent or will to pay capacity charges to IPPs for the electricity actually not produced by IPPS and actually not purchased, due to guaranteed capacity payment (capacity charges) clauses in the PPAs in violation of the fiduciary duty of the respondents."
The petitioners argued that it was unfair and significantly imbalanced to pay capacity charges to IPPs in US dollars (or a foreign currency) even for unproduced electricity requiring no inputs purchase costs in US dollars or a foreign currency and whether such payments amount to exploitation of the people of Pakistan and unjust enrichment of IPPs at the expense of people of Pakistan, making it practically impossible to procure affordable electricity.
It further added, "The investors of IPPS could not carry a zero-investment risk and could not be lawfully guaranteed a fixed return on their investment, and the terms of PPAs and any "Implementation Agreements" are un-Islamic to the extent that IPPs do not share the loss component with the other parties to the PPAs and thus violative of Articles 2A and 227 of the Constitution."
"It is respectfully submitted that the government and/or relevant respondents could not allow, and IPPS could not lawfully seek to increase their production capacities in situations where IPPs initial (or subsequent) installed production capacities were under-utilised by IPPs and/or the relevant respondents, including due to any transmission lines limitations known to all the parties concerned and such unlawful acts were done solely to extort higher capacity charges without actual production and therefore payment of capacity charges to such relevant IPPs and any guarantees or sovereign guarantees to that extent is void ab-initio."