Nandipur project: Govt intensifies efforts to resume work on power plant

Renegotiates deal with Chinese contractor, ministry seeks loan guarantees.

ISLAMABAD:

The new government has stepped up efforts to immediately resume work on the 425-megawatt Nandipur power project and is trying to lure back the disgruntled Chinese contractor, which abandoned the project during the tenure of the previous government, with the offer of a contract revision.

“We are renegotiating the deal with the Chinese contractor – Dongfang Electric Corporation – for the last two days and Punjab province is part of the negotiations,” a water and power ministry official told The Express Tribune. “About 90% issues have been settled,” he said.

The Chinese firm had sought compensation for losses caused by delay in clearance of $85 million worth of machinery that remained stuck at the Karachi Port for over two years.

“Now, we are to decide on the losses the company has suffered,” the official said, adding Pakistani and Chinese delegations had developed consensus on a host of issues like mobilisation advance, rent, demurrage and refurnishing the machinery, which has been at the port for three years now.

To restart the project, the Ministry of Water and Power has sent a summary to the Economic Coordination Committee (ECC) of the cabinet, which will meet today (Thursday), seeking government guarantees for Rs23.49 billion in loans to be acquired from banks.

The ministry has also called for removing demurrage and detention charges estimated at Rs786 million.

Earlier, the ECC had waived demurrage and detention charges amounting to Rs856.5 million on the machinery brought for the project, but got stuck at the port.

Water and Power Minister Khawaja Asif is keen to resume work on the power project, a combined cycle plant that will be built in Nandipur near Gujranwala.

He had also filed a petition against the delay and the judicial commission formed by the Supreme Court held the Ministry of Law responsible for taking more time in vetting the guarantees.

A summary, sent by the water and power ministry for legal opinion of the law ministry, had remained pending with the latter for two years from March 2010 to March 2012.

According to the original plan, the project should have been completed by April 2011.

The delay forced a consortium of Chinese banks, comprising BNP Paribas and Export-Import Bank of China, to pull out of the project, for which it had already signed the Sinosure Buyer Credit Facility Agreement worth $150.151 million with Northern Power Generation Company Limited in March 2009.

Now the government desires to acquire Rs23.49 billion in loans from domestic banks to finance the project itself.

A senior government official said the power project would require total financing of Rs57 billion, of which Rs23.49 billion would be borrowed from Pakistani banks against government guarantees.

The ECC in a meeting held in July last year had approved increase in sovereign guarantees from Rs5.3 billion to Rs19.1 billion in favour of domestic banks as a stopgap arrangement until foreign loans came.

Published in The Express Tribune, June 27^th, 2013.

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