Govt to sell off Haveli Bahadur Shah power plant

Cabinet energy committee takes decision to privatise the plant in first phase

ISLAMABAD: The government has decided to privatise, in the first phase, the 1,200-megawatt liquefied natural gas-based power plant being set up at Haveli Bahadur Shah, Punjab in an effort to cope with power shortages.

The Cabinet Committee on Energy took the decision in its meeting held on September 15, a senior government official said.

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The committee, chaired by Prime Minister Nawaz Sharif, asked Water and Power Secretary Younus Dagha to hold a meeting with Finance Minister Ishaq Dar to explore the best possible options for selling off the power plant such as creating a special cell and prepare the Request for Proposal (RFP) document in light of his advice.

The secretary suggested that matters pertaining to privatisation fell within the domain of the Privatisation Commission and the planned sale of Haveli Bahadur Shah power plant should be referred to the Ministry of Privatisation.

Committee members saw a great potential in the power project to stimulate foreign investment and stressed that the traditional approach should not be pursued for its privatisation.

Three LNG-based power plants with a cumulative capacity of approximately 3,600MW are being built in the public sector at Bhikki, Balloki and Haveli Bahadur Shah in Punjab. They will consume imported LNG as fuel for power generation and help ease the shortfall.



The Bhikki plant is being constructed by the Quaid-e-Azam Thermal Power Private Limited, a company wholly owned and controlled by the government of Punjab.

The remaining two projects are being developed by the National Power Park Management Company Limited, which is wholly owned and controlled by the federal government, and are being financed through the Public Sector Development Programme.

"In case of privatisation of Haveli Bahadur Shah and Balloki projects, the Privatisation Commission before discharging the responsibility under applicable laws and in case of privatisation of Bhikki project, the ECC will review and adjust the risk allocation under the implementation agreement," the Economic Coordination Committee (ECC) said in a meeting held on June 28.

The implementation agreement is exclusively for the three public-sector power projects in light of the policy designed for independent power producers (IPPs).

The ECC also allowed the LNG-based plants to run without considering the merit order, which entails gas supply to the cheaper power plants first, in accordance with the concept of take-or-pay liability and the gas sales agreement with LNG supplier Qatar.

A long-term supply contract between Qatar and Pakistan State Oil (PSO) also contained the take-or-pay provision, hence, all enterprises within the supply chain including PSO, Sui gas companies, IPPs and the Central Power Purchasing Agency would take their part of risk for failing to consume the ordered gas.



During the meeting, the Ministry of Water and Power revealed that according to the gas ordering mechanism, a firm order had to be placed for every calendar year months before the start of the year and then the entire volume should be consumed, otherwise losses would have to be borne.

"This means that the power purchaser will not like to make capacity payments to the producer with the utilisation of gas," the ministry said. "LNG plants are amongst the most efficient and there is a remote possibility that they do not come on top in the merit order."

Published in The Express Tribune, October 15^th, 2016.

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