Govt to claim damages from US turbine supplier

Decision taken in the wake of delay in work on two LNG power plants

ISLAMABAD: The government has decided to recover liquidity damages from US-based gas turbine manufacturer General Electric for delay in work on two liquefied natural gas-based power plants being set up in Punjab.

The decision was taken in a high-level meeting chaired by Prime Minister Nawaz Sharif last month.



Quaid-e-Azam Thermal Power Company CEO Ahad Cheema, who is associated with an LNG power project, told meeting participants that General Electric had put off delivery of gas turbines for the two power plants in Balloki and Haveli Bahadur Shah by around three to four months. Therefore, the projects would not start running before the summer of 2017.

According to the new timelines, first units of the power plants would not be built before August 2017.

He revealed that in a meeting between the Punjab chief minister and General Electric representatives, the former expressed his displeasure over the delay in the supply of turbines and urged them to try to meet the deadline.

The chief minister also asked about the alternative proposals offered by General Electric for addressing the matter.

Cheema pointed out that the government had timely met all procedural formalities, but General Electric probably did not expect Pakistan to move at such a fast pace and as a result it failed to keep up with its commitment.



The alternative proposals given by General Electric have fallen short of government’s criteria, say officials. At present, the focus is on how much improvement could be achieved in terms of project deadlines with the likelihood that two of the four turbines may arrive by May or June next year.

General Electric has suggested cutting the installation and trial period of the gas turbines by eight to ten days in an attempt to avoid further delay.

However, some meeting participants voiced concern over the proposal, insisting that proper installation and testing should be carried out. In case the trial period was cut short, they said, the responsibility for any malfunctioning or mishap in the future would rest with General Electric.



Cheema suggested that if the company was unable to deliver the turbines by the set timeframe, then liquidity damages could be claimed according to the contract agreement.

The prime minister directed the CEO of National Power Company, which was also working on LNG power plants, to make all-out efforts to reduce the delay and get gas turbines according to the committed timelines.

It was further directed that if the company did not provide the turbines by the set timeframe, then liquidity damages should be imposed and recovered besides any other action that may be taken according to the contract agreement.

Published in The Express Tribune, October 22^nd, 2016.

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