Infrastructure development: ECNEC approves project with cost rationalisation directive

Planning ministry says cost not based on detailed feasibility study.


Shahbaz Rana July 18, 2014

ISLAMABAD: Despite a sketchy feasibility report and concerns over award of contract in violation of competition laws, the government on Friday approved, in principle, infrastructure development for 6,600-megawatt Pakistan Power Park at Gadani at an estimated cost of Rs146.6 billion.

The Executive Committee of National Economic Council (Ecnec) – the highest project approving body – cleared the project with directives that concerns of government agencies should be addressed.

A day earlier, the Central Development Working Party (CDWP) had cleared the mega scheme for final approval of Ecnec.

Under the project, infrastructure facilities will be developed at the power park for establishing 10 imported coal-based power plants of 660 megawatts each.

Finance Minister Ishaq Dar, also the Ecnec chairman, directed the planning and development secretary to further rationalise project cost, said a handout issued by the Ministry of Finance.

He emphasised that it was the responsibility of the planning and development ministry to ensure that there were factual calculations and they remained the same until completion of work.

While the CDWP cleared the project for consideration of Ecnec, the Ministry of Planning had some objections. The biggest objection was that the cost of Rs146.6 billion was not based on any detailed feasibility study and was arrived at on the basis of rough estimates, said a ministry official.

Secondly, it spoke against the award of engineering, procurement and construction contract on a single-party basis and asked the government to follow competition rules.

According to sources, Chinese officials are pushing Pakistan to award contracts of projects initiated under the China-Pakistan Economic Corridor to Chinese investors on a single-party basis.

Thirdly, there was also some fault with the design as it lacked a complete value chain. The focus of the water and power ministry, the sponsoring agency, was on import of coal and power generation, the official said.

According to him, Sindh and Balochistan also aired concern over heavy reliance on imported coal for electricity generation at the Gadani park.

“China has agreed to provide debt to cover 85% of the project cost, but so far no agreement has been signed. The water and power ministry is also clueless about the cost of the loan,” he added. Dar asked the ministry to address all concerns.

The project includes marine works including two breakwaters each measuring 3.5 km and 1,100-metre-long jetties and berths for receiving ships of 40,000 to 210,000 deadweight tons including floating jetty for anchoring small boats and tug boats, provision of cooling water facilities and other related infrastructure. The project will be completed in three and a half years.

Water supply scheme

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 will have the capacity of 650 million gallons per day (MGD) to meet water demand of 18.5 million people living in Karachi. Current demand is about 1,000 MGD compared to existing supply of 650 MGD, a shortfall of 350 MGD. The project will be completed in four years.

Published in The Express Tribune, July 19th, 2014.

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COMMENTS (3)

Saud | 7 years ago | Reply Tribune has a way of spinning positive news reports negatively. The project is in initial stages, of course the costs are just estimates. No money is being issued to anybody just yet. This is just an in principle decision to go ahead with the project. As for the award of contract to Chinese company this is a requirement from China to secure their money as they are making huge investments into the project. This will be Pakistan's biggest power project upon completion. Well done PMLN.
sabi | 7 years ago | Reply

Another big blow on ‘orderlies’ and their corrupt sahibs.

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