Pakistan Power Park project cleared by ECNEC

Ministry of Planning objects project, says cost was worked out on the basis of rough estimates.

Shahbaz Rana July 18, 2014

ISLAMABAD: Despite sketchy feasibility and concerns over plans to award a contract by bypassing a competitive process, the government on Friday approved, in principle, the construction of the 6,600 megawatts (MW) Pakistan Power Park Project at Gadani at an estimated cost of Rs146.6 billion

The project was conditionally cleared by the Executive Committee of National Economic Council (ECNEC) – the highest project approval authority, with directions to address the concerns of concerned government agencies.

The ECNEC approved it a day after the Central Development Working Party (CDWP) cleared the mega scheme for final approval of the highest body.

The project aims at developing infrastructure facilities at the Pakistan Power Park at Gadani for establishing 10, 660MW of imported coal-fired power generation plants. Under the project, a coal supply system, jetty head, cooling water facilities and several other installations will be built.

While approving the project in principle, the chairman of ECNEC -- Finance Minister Ishaq Dar -- directed the secretary of planning and development to further rationalise the cost of the project, according to a handout issued by the Ministry of Finance.

Dar emphasised that it was the responsibility of the Planning and Development Ministry to make sure that the calculations should be factual and remain the same till completion, it added.

Ministry of Planning concerns

While the CDWP had cleared the project for ECNEC consideration, the Ministry of Planning recorded its objections against the project.

The biggest objection was that the Rs146.6 billion cost was not based on any detailed feasibility study, according to an official of the planning ministry. He said the cost was worked on the basis of rough estimates.

Secondly, the ministry also objected the plan of awarding the project’s Engineering, Procurement and Construction (EPC) contract on a single party basis. It has advised the government to follow the competitive rules, he added.

Sources said the Chinese were pushing Pakistan to award the contracts of the projects initiated under the China-Pakistan Economic Corridor (CPEC) initiative to Chinese investors on a single party basis.

Under the CPEC China wants to secure energy and transportation lines through Pakistan for the western part of China. In return, Islamabad is seeking Chinese assistance for some mega projects.

Thirdly, said the official, there were also faults with the design, as it lacked the complete value chain. The official said the focus of the Ministry of Water and Power, the sponsoring agency, was on the import of coal and power generation.

The official said Sindh and Balochistan showed concerns over heavy reliance on imported coal to generate electricity at Gaddani Power Park.

China will provide debt to cover 85% of the project cost, but so far no loan agreement has been signed, said the official. The Ministry of Water and Power was also clueless about the cost of the loan, he added.

The ECNEC chairman has asked the Ministry of Water and Power to address all concerns raised by the Ministry of Planning.

The major scope of project includes marine works -- including two breakwaters, each measuring 3.5 kilometres and 1100 metre long jetties and berths for receiving ships the size of 40,000 DWT to 210,000 DWT, which also includes a floating jetty for anchoring small boats and tug boats, provision of cooling water facilities and other related infrastructure, according to the Ministry of Finance handout. It added that the project will be completed in three-and-a-half years.

The ECNEC also approved phase-I of the Greater Karachi Water Supply scheme at a total cost of Rs25.5 billion. Half of the cost will be borne by the federal government.

The project has been designed with a total capacity of 650 million gallons per day (MGD) to meet the water demand of the 18.5 million inhabitants of Karachi. The present water demand in Karachi is approximately 1000 MGD, whereas the total existing supply is 650 MGD, resulting in a shortfall of 350 MGD. The project will be completed in four years.

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