KARACHI – The federal government has forfeited the $1.125 million guarantee of Hub Power Company (Hubco) after the latter’s failure to complete the 214 megawatt power project in Narowal district of Punjab, the power company said in its directors’ report to shareholders at Karachi, Lahore and Islamabad stock exchanges.
The government took the punitive measure in December last year after the contractor failed to complete the 214MW Narowal plant per agreed schedule. “Due to the delay in completion, the government of Pakistan en-cashed the company’s guarantee for $1.125 million… for not meeting our contractual commitment,” the company conceded.
As per the construction contract, a German firm, M/s MAN, was to make the project commercially operational by March 31, 2010. The completion date, however, was subsequently extended by the contractor to October 31, 2010 when a major equipment failure at the project took place on August 26. A financial settlement was then negotiated by the company with the German power plant developers from M/s MAN.
“A delay was encountered in the commissioning of our 214MW Narowal project due to a major equipment failure,” the company said. The company, however, has decided to adjust its losses on account of equipment failure by including the same in its insurance claim. Following the unfortunate incident, the company was eyeing March 2011 as a fresh deadline for the completion of the project.
“The company believes a completion date of March 2011 is achievable,” it said.
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