Shahbaz scrambles to bring 2,000MW on line in nine months

The Pakistan Muslim League –Nawaz is set to add 2000MW electricity to the national grid in the next nine months by resuming work on two abandoned power projects, local media reports said on Monday.
According to details by a senior PML-N leader, this is one part of the strategy to meet the power shortage plaguing the country. “Shahbaz Sharif is engaged in negotiations with a Chinese company to resume work on the two abandoned power generation projects in Nandipur and Chicho-ki-Malian to produce a total of 950MW,” he said.
He said the senior PML-N leadership has already spoken to the Punjab sugar mills owners to produce some 900MW electricity by using bagass and assured them of necessary changes in the legal framework for this purpose. Moreover, Chinese contractors have been informed that the government would take every step to facilitate them only if the two projects are completed without any further delay. The two power projects at Nandipur and Chicho-ki-Malian remain at a standstill due to the criminal negligence of the federal law ministry. The projects failed to clear the issuance of the sovereign guarantee by the finance ministry to the contractor, resulting in the termination of work.
Some time ago, the PML-N took the matter to the Supreme Court, which constituted a commission of inquiry, which held the law ministry responsible and ruled that a loss of Rs 120 billion was caused because of non-completion of the two projects. The apex court ordered stern action against those named as guilty in the commission’s report, but due to official apathy the inaction continued. As a result, the report became just a useless piece of paper.
On completion, the Nandipur power project (originally costing $329 million) and Chicho-ki-Malian Combined Cycle Power Plant (costing $354.5 million) was to add to the national grid 425MW and 525MW respectively. The Nandipur project was forecast to be completed by April 2011.
Officials fear that the cost of the projects will certainly go up because of the delay for trivial reasons. The sorry state of the project left no doubt that it was treated by the Law Ministry as an orphan.
The project agreement relating to Chicho-ki-Malian also hit snags and was delayed as Nandipur project was not materialising. Both the Nandipur and Chicho-ki-Maliann projects received the approval of the Economic Coordination Council (ECC), Cabinet Division and all other relevant approvals prior to signing of the contract advance payments and start of project implementation (10 % advance payment for Chicho-Ki-Malian was made in 2008 as well).
The contract for the Nandipur project was signed on Jan 28, 2008, between Dongfang Electric Corporation Limited China (DEC) and Pepco. The project was implemented by Genco-III under the overall management of Pepco at an agreed cost of $329 million (0.7 million dollar per megawatt). GE was awarded contract as the gas turbine supplier from its manufacturing facility in Belfort, France. For foreign currency financing Pepco signed export credit agreements (ECAs) with Coface France (for financing GE’s portion) and China Exim/Sinosure (for financing Chinese portion). The ECAs were signed on Oct 3, 2008, and 10% advance payment was also released in the same year.
Nandipur project’s letter of credit was established on Oct 16, 2008, as an interim arrangement through a syndicate of local banks. The gas turbine and major equipment has already been shipped and is at the site.