The facts about Nandipur Power Pro­ject

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What was aimed to be the gov­ern­ment’s step­ping stone in tack­ling the energy woes has turned into a night­mare. The mys­tery about Nandipur Power Pro­ject has been un­rav­elled with its ut­ter fail­ure; a look at the pro­ject’s timeline and cost is a clear in­di­ca­tion of that.

Seven years ago in Jan­uary 2008, Pak­istan Elec­tric Power Com­pany (PEPCO) signed Rs23 bil­lion (around $329 mil­lion) con­tract with Dong Fang Elec­tric Cor­po­ra­tion of China to con­struct the Nandipur Power Pro­ject. The pro­ject was planned to be a 425MW com­bined cy­cle ther­mal power plant si­t­u­ated at Nandipur near Gu­jran­wala in the Punjab, with a po­ten­tial to reach 1000MW. The pro­ject was sched­uled to be com­pleted by April 2011, but the then Law Min­is­ter de­layed the ap­proval of the Nandipur pro­ject for two years. The de­lay re­sulted in around Rs43 bil­lion be­ing lost dur­ing 2012-13, and $85 mil­lion worth of ma­chin­ery be­ing ma­rooned at Karachi Port, which ul­ti­mately led to ter­mi­na­tion of the con­struc­tion con­tract by the Chi­nese coun­ter­parts in 2012. That was thought to be the end of it.

How­ever, in June 2013 when the in­cum­bent gov­ern­ment took of­fice, it started rene­go­ti­at­ing the power pro­ject with the same Chi­nese firm to re­sume work. And by May 31, 2014, the Prime Min­is­ter in­au­gu­rated the power plant. This hap­pened within a year, and that’s the only pos­i­tive as­pect of it; in only five days, Nandipur Power Plant was non­op­er­a­tional. Though af­ter a year, i.e. in July 2015, the pro­ject was al­legedly op­er­a­tional again, by that time the whole pro­ject was shrouded in var­i­ous sorts of ob­scu­ri­ties.

Why did the gov­ern­ment com­mis­sion the pro­ject when it wasn’t com­plete or ready? What have been the key is­sues with its op­er­a­tional ca­pa­bil­ity? What is the ac­tual cost of the pro­ject? These are some key ques­tions, and the an­swer to these make the gov­ern­ment re­but­tal weak.

First and fore­most, the cost of the pro­ject has es­ca­lated sharply, and why wouldn’t it; it took seven years for the pro­ject to start gen­er­a­tion and that too has be­come con­tro­ver­sial. The ini­tial con­tract cost was around Rs23 bil­lion, which shot up to Rs58 bil­lion when the present gov­ern­ment rene­go­ti­ated it – an in­crease of 152 per­cent. A new mys­tery en­gulfed the con­tentious pro­ject when NEPRA de­clared the cost to have sky­rock­eted to Rs84 bil­lion; how­ever, the Fed­eral Min­is­ter for Wa­ter and Power has clar­i­fied on tele­vi­sion that the ac­tual cost of Nandipur Pro­ject is the same, with around Rs50 bil­lion out of the to­tal spent on the pro­ject so far.

The main rea­son for the cost es­ca­la­tion has been cost over­runs, and op­er­a­tional, po­lit­i­cal and ad­min­is­tra­tive mis­man­age­ment. Be­sides the in­crease in the pro­ject cost, the plant when in­au­gu­rated did not have a fur­nace oil treat­ment plant (FOTP), which was cru­cial as the pro­ject is based on fur­nace oil as op­posed to diesel. Later the FOTP ar­rived af­ter the plant was in­au­gu­rated by the Prime Min­is­ter, and it was re­alised that the treat­ment plant’s ca­pac­ity was not ad­e­quate for 425MW fur­nace oil. Even af­ter that the plant could not start gen­er­a­tion as fur­ther pro­cess­ing of faulty FOTP met with de­lays.

It would be no ex­ag­ger­a­tion if the gov­ern­ment de­meanour is matched with haste and lack of pro­fes­sion­al­ism. The Min­istry of Wa­ter and Power is now left with no op­tion but to ac­cept the blun­ders on their part. In a tele­vi­sion show, the Min­is­ter for Wa­ter and Power has been seen ac­cept­ing that the rea­son be­hind Nandipur Power Plant not run­ning at its full ca­pac­ity has been tech­ni­cal faults in the fuel treat­ment plant, but he shifted the blame to the pre­vi­ous gov­ern­ment say­ing that it was pur­chased in their ten­ure.

The pro­ject is be­ing pro­gressed to be­ing con­verted to gas by next year with a tar­get of 525MW to re­duce the per unit gen­er­a­tion cost. Not only that, the pro­ject has been an ex­am­ple of pro­fes­sional in­com­pe­tence as well – some­thing that is preva­lent in most en­deav­ours of the gov­ern­ment.

Is­sues of trans­parency, pro­fes­sional in­com­pe­tence and po­lit­i­cal in­tru­sion have been the key is­sues of the energy sec­tor, and the public sec­tor at large. Whether it’s Nandipur, the LNG deal, PSO’s cor­po­rate gov­er­nance or any other mat­ter, the re­sults won’t be promis­ing with such at­ti­tudes, re­flect­ing neg­a­tively on the gov­ern­ment’s modus operandi. And no pro­ject would see the light of the day.

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