Nandipur power project: Chinese firm demands $40m as compensation for delays
The Government of Pakistan finds itself mired in a new controversy: a Chinese firm involved with the Nandipur power plant has demanded payment of $40 million in compensation for the oft delayed construction of the 425 megawatt project, if the government still wishes for the firm to continue with the project. The combined-cycle power plant was to be installed in Nandipur, near Gujranwala in Punjab.
The Chinese firm had served a notice to the Government of Pakistan calling for the termination of the project contract due to delays in its construction. During renegotiations, however, the firm agreed not to ditch the project; nonetheless, it countered with a demand that it be paid for losses suffered because of depreciation and damages on machinery stranded at the Karachi Port for the two year delay in the project’s completion.
The Economic Coordination Committee (ECC), in a meeting held in the first week of July, had approved an increase in the size of sovereign guarantees for the project from Rs5.3 to Rs19.1 billion, in favour of a consortium of local banks, as a time-gap arrangement till foreign loans for the Nandipur Project could be obtained. The economic body had also waived demurrage and detention charges amounting to Rs856.5 million on machinery meant for the project that was to pass through the Karachi Port.
Sources said that on top of the waiver of demurrage and detention charges, Chinese firm Dongfang Electric Corporation Limited (DECL) Zhang Guorong has demanded that Pakistan pay $40 million for losses suffered by the company due to the non-clearance of its machinery from the port. When contacted, the spokesperson for the Ministry of Water and Power was not available for comment.
Official sources said that the firm now wants new terms and conditions if the Government of Pakistan wants it to continue with the project. “The project is once again stalled due to the new demands of the Chinese firm for a huge sum of money [sic],” a source said.
The Supreme Court has already taken notice of the frequent delays in the completion of the Nandipur project, and fingers have been raised towards one particular minister.
A judicial commission formed by the Supreme Court had held the federal law ministry responsible for causing delays in the completion of the project. Ministry of Water and Power had sought a legal opinion on foreign guarantees from the Ministry of Law and Justice regarding its contract with the Chinese firm on the Nandipur project, but the summary was not forwarded for two years by the law ministry – from March 2010 to March 2012 .According to the original plan, the project was supposed to be completed in April 2011.
Published in The Express Tribune, November 13th, 2012.
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@I think: to Raj-USA "The sin of money and business can’t touch our sacred souls." What is the going rate for "sacred souls"? You can mortgage it, can't you?
@I think: Chinese company is not even demanding lost profits or punitive damages. 2nd paragraph of this news item clearly says that the Chinese company is asking to be paid for losses it suffered because of depreciation and damages on machinery stranded at the Karachi Port for the two year delay in the project’s completion. You cannot cause loss to someone and also ask them the bear the loss. Where does religion come in this commercial transaction and does Islam justify causing loss to others and not take responsibility for it?
people without any knowledge stop commenting. its a private company which suffered loss because of incompetent federal govt and corrupt law ministry. now no matter how much we cry, we as a nation have to pay losses. get the house inorder first, no one will come n work in pak if this goes on. Balochistan govt arm twisted a tethyan copper on riko dik project after the contract, and now is facing a law suit in international court!
@I think: Is it sarcasm or you really believe what you have said?
@i think ...seriously...you actually mean this ????? Its sarcasm right ..if not ..you deserve to hve your online license revoked.....
@I think We musalmeens don’t care money , we care only relation.
That's a convenient argument when you owe someone money. Unfortunately trade is a two way street, where there is exchange of money or kind. It cannot be "You give us things,we give you 'relation' in return"
@Raj - USA
You Indians only think out money , where is relation ? It has been delay because of local protests. We musalmeens don't care money , we care only relation. China is howing its true color . The sin of money and business can't touch our sacred souls.
All weather freinds. Friendship taller than the mountains.
This is a very reasonable demand by the Chinese company. Contracts have to be honored by both sides and Pakistan delayed the project unjustifiably for a long duration.
chinese are showing their colors.. so long as they can reap profits by milking us, they are happy... they have captured every industry in this country... Pakistan is virtually a chinese colony... as time pass and more of national assets are sold to the chinese, they will arm twist us the way they want.. chinese have done the same in africa, now its our turn...