Cogen Plant: DHA residents’ dream goes sour

Published: April 6, 2014
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The plant had the capacity of producing 94 megawatts of energy and had production capacity of approximately 14 million litres of drinking water daily. IMAGE: DHACOGEN.COM

The plant had the capacity of producing 94 megawatts of energy and had production capacity of approximately 14 million litres of drinking water daily. IMAGE: DHACOGEN.COM

KARACHI: 

Defence residents’ dream of uninterrupted supply of water and power may remain unfulfilled as the Cogen desalination plant heads towards its end.

The plant, built on a 10-acre area in DHA Phase-VIII, is heading towards liquidation, as its owner failed to start full-fledged operations and the lenders are demanding their money back.

The plant had the capacity of producing 94 megawatts of energy and had production capacity of approximately 14 million litres of drinking water daily. It was considered to be a key component of a $600million infrastructure project undertaken by the Defence Housing Authority.

Upon completion, the project was supposed to cater to the water and power needs of approximately 800,000 people. By linking the power plant with a thermal desalination facility, almost 85 per cent of the energy contained in the natural gas was to be utilised.

Unfortunately, the dispute over delays in initiating its commercial operations has taken the matter to court. One of the lenders, IGI Investment Bank, has pleaded to the Sindh High Court to appoint an official liquidator.

Instituting a lawsuit through its attorney, Saqib Jamal, the bank said it had provided finance facility in the sum of Rs150,000,000 to DHA Cogen Limited for the plant. The bank said it had extended the short term finance facility in terms of the agreement dated November 28, 2007.

In the breach of the terms and conditions, the defendant had initially failed to pay the amount of the finance facility, Jamal told the court recently. On April 10, 2009, the bank sent a legal notice to DHA Cogen Limited, asking it to pay liabilities amounting to Rs174,145,233 within seven days. DHA Cogen failed to pay yet again. The bank claimed that DHA Cogen Limited had initially failed to commence its commercial operations within the stipulated time frame. Once commenced, the same were suspended from September 12, 2008 to February 22, 2009. The operations were suspended a second time in May 2010.

According to the plaintiff, the audited accounts of the defendant showed that its liabilities had exceeded the value of its assets. It could no longer do business in a commercially viable manner, said Jamal.

The court was pleaded to order DHA Cogen Limited to wind up its operations and appoint an official liquidator with all powers of administration of the defendant’s assets.

The bank also sought appointment of a provisional manager, as it claimed that DHA Cogen Limited was likely to dispose of its assets, which would deplete the security credit in favour of the plaintiff and other creditors. The defendant may attempt to manipulate its record, the plaintiff claimed.

SECP’s version

In its comments, the Securities and Exchange Commission of Pakistan (SECP) has informed the court that charges have been registered against DHA Cogen Limited.

The SECP admitted that the accounts of the defendant, ending on June 30, 2009, showed that its assets were worth Rs10,021,794,357, while the liabilities were Rs8,086,497,357. The matter would be taken up for hearing soon.

DHA residents

Meanwhile, it will be residents of one of the country’s most upscale localities, the Defence Housing Authority, who will bear the brunt of the project’s closure.

Speaking to The Express Tribune, the DHA Residents Association general secretary Aziz Soharwardi said that the project could have helped meet the shortage of water and power supply to some extent. “Currently, we receive 7-8 MGD water from the Karachi Water and Sewerage Board. The demand is over 10 MGD.”

He agreed that the DHA should come forward to run the plant, which if liquidated, may be sold at much lower rates.

Published in The Express Tribune, April 6th, 2014.

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Reader Comments (15)

  • Amir
    Apr 6, 2014 - 9:44AM

    This is what we have to live in Pakistan for…no planning, future thought, and will to initiate projects for betterment of society. Only betterment is their own pockets…sell the land, build flats, occupy and obtain more land at cheaper value, tax the people who can be taxed, ignore businesses and feudals/politicians who dont pay taxes.

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  • Aam Aadmi
    Apr 6, 2014 - 10:21AM

    The power plant was envisioned by former City Nazim, Naimatullah Khan for the denizens of Karachi. But his successor had no interest in it since it was not willing to give kickback to London. Similarly, the Federal Government of PPP was also disinterested in anything other than Rental Powers.

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  • Parvez
    Apr 6, 2014 - 2:14PM

    Inaugurated by Musharraf………worked for about FOUR DAYS……. about USD 120 million down the drain and into many pockets.

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  • Parvez
    Apr 6, 2014 - 2:15PM

    …….ACCOUNTABILITY……ZERO…….and why am I not surprised.

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  • Abid P. Khan
    Apr 6, 2014 - 2:31PM

    @Aam Aadmi:
    Wow.
    .
    You are saying things that are really shocking. Can you substantiate any of this, might give credibility to your statements.

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  • Riaz Khan
    Apr 6, 2014 - 4:02PM

    Sad story of Pakistan!

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  • SyedPk
    Apr 6, 2014 - 4:38PM

    @Aam Aadmi,
    shows how much you know,
    DHA doesnt even come under CDGK. He had no authority over DHA. Stop living in dreams and wake up, Naimatullahs reign was a failed one.

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  • FN
    Apr 6, 2014 - 5:12PM

    The DHA Cogen plant was a total scam from day one. The head honcho of DHA along with his front man connived a scheme through which they made millions of dollars in commissions and the result was DHA got machinery which was not new but in fact scrap. That is the reason the plant could never operate in any sort of continuous manner. The culprits are sitting comfortably enjoying their ill gotten wealth, knowing that nobody is ever taken to task here.

    I think the last point has been proven, because even this article fails to mention anything about the real scam and just points to the fact that plant has failed to pay its liabilities.

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  • truth
    Apr 6, 2014 - 7:47PM

    @@Aam Aadmi,..think before you comment…DHA comes under defense authority

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  • Ajab Khan Baloch
    Apr 6, 2014 - 9:05PM

    Siemens supplied the plant ,so kickbacks are assured?
    DHA Cogen Limited (DCL) is a Public Limited Company incorporated in the city of Karachi on January 19, 2003. DCL is a joint venture between Defence Housing Authority, Karachi (DHA) and Sacoden Investments, Singapore (SI).

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  • Masood Mirza
    Apr 6, 2014 - 10:18PM

    Those who do not know the background of Naimatullah Khan’s envision should read the following link:
    http://archives.dailytimes.com.pk/national/29-Mar-2005/us-firm-to-build-two-desalination-plants
    My advice is to regularly read a good English newspaper like Express Tribune rather than remain in self-denial mode.

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  • truthbetold
    Apr 7, 2014 - 12:00AM

    @Amir:

    “This is what we have to live in Pakistan for…no planning, future thought, and will to initiate projects for betterment of society”

    No need to despair. You still have Islam and nuclear weapons. In 1947, Pakistan was created to save Islam and in 1971 Pakistanis decided to eat grass to get nuclear bomb. You now have both, you must be a happy person.

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  • SyedPk
    Apr 7, 2014 - 4:34AM

    @ Masood Mirza,

    The plant this article is about is under DHA, and the name of the plant is DHA Cogen plant . Even the name suggests it comes under DHA. DHA would never give any of its land to CDG to build a plant, and CDGK wouldnt build a plant in DHA, intended to supply water and electricity to DHA residents (who pay taxes to DHA not CDGK).

    I would suggest you go and have your IQ checked out. Just because Naimatullah planned for couple of desalination plant, doesnt mean in any sense that there cant be other plants.

    Also Just for the record, this plant was installed, and started running, it stopped only due to mismanagement.

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  • Muslim Leaguer
    Apr 7, 2014 - 8:56AM

    @Parvez:
    There were many other projects too whose ribbon was cut (inaugurated from Airport) but failed within a few days. Don’t you remember the Shershah Flyover that killed so many people & caused huge damage within 1 week of it’s off-site inauguration by Musharraf??

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  • Mishrab
    Apr 7, 2014 - 11:40AM

    It is shocking news. Do the DHA has mandate to generate power (for any purpose). My personal experience being in power sector reveals that there is zero possibility of cogen at shore line.

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