Editor’s Desk

Enterprise - - Contents -

The Nandipur power project is just one ex­am­ple that demon­strates the ap­a­thy of state gov­er­nance and how projects in the pub­lic sec­tor are ruth­lessly han­dled. Even projects start­ing on sound tech­ni­cal and financial vi­a­bil­ity, like Nandipur, are messed up dur­ing ex­e­cu­tion stages due to var­i­ous rea­sons. Nandipur was well wrapped up in 2008 at a cost of Rs 23 bil­lion ($350 mil­lion) and was handed over to the PPP gov­ern­ment as a power project ready to go and bring on grid 425 MW of power by 2010. Dur­ing the whole of the ten­ure of the last gov­ern­ment there was no move­ment and for over three years the plant was left to rot at Karachi Port for want of doc­u­men­ta­tion and le­gal com­pli­ance. In the mean­time, the de­mur­rage at port and in­ter­est payable to lenders kept on es­ca­lat­ing while the pub­lic con­tin­ued to suf­fer.

The PML gov­ern­ment de­cided to pull out the plant from the port in a des­per­ate at­tempt to bring on grid ad­di­tional power to ease the power cri­sis and inch up some­where nearer in ful­fill­ing its prom­ise to the peo­ple for re­lief from load shed­ding. But they went out too much in haste, prob­a­bly mis­guided by the tech­ni­cal team on ground. In May 2014, a bit ahead of the feared sum­mer load­shed­ding, PM Nawaz Sharif in­au­gu­rated the Nandipur plant giv­ing hope to the peo­ple that the ad­di­tional power on the grid would ease the load shed­ding. This never hap­pened and the load shed­ding in the sum­mer of 2014 was as bad as in 2013, if not worse.

Nandipur is still too far away to be on the grid, if it all hap­pens. The pre­ma­ture in­au­gu­ra­tion of the plant in May 2014 was a big mis­take, per­haps done on un­pro­fes­sional tech­ni­cal ad­vice and over-com­mit­ment of the plant team. It is re­ported to have been then op­er­ated in haste for the in­au­gu­ra­tion on diesel fuel rather than on the pre­scribed fur­nace oil as the fur­nace oil plant was still com­ing. It is like try­ing to run a petrol car on diesel; you mess up the en­gine. Fur­ther, the pro­to­cols de­mand that af­ter the sat­is­fac­tory com­ple­tion of in­stal­la­tion and com­mis­sion­ing works, the plant is sub­jected to closely mon­i­tored test runs and cer­ti­fi­ca­tion process wit­nessed and cer­ti­fied by the reg­u­la­tors and man­u­fac­tur­ers. On com­ple­tion of all th­ese pro­to­cols, the cer­tifi­cate of Com­mer­cial Op­er­a­tional Dis­patch (COD) is is­sued. It’s now over 15 months since the plant was in­au­gu­rated and we are nowhere near a COD.

In the mean­time, the gov­ern­ment is at­tempt­ing to con­vert the plant to nat­u­ral gas and add 100MW to its in­stalled ca­pac­ity of 425MW. One is not sure of the tech­ni­cal vi­a­bil­ity of the said con­ver­sion nor the surety of gas avail­abil­ity nor its ben­e­fit to con­sumers, but, one is sure that this ad­di­tion financial bur­den and the fur­ther de­lay in COD will de­fi­antly mess up the al­ready messed up financial fea­si­bil­ity of the project.

In April 2015, Nepra ap­proved an over­all cost of Rs 45 bil­lion for the Nandipur project. The gov­ern­ment has put up a re­quest to jack it up to Rs 65 bil­lion. The pe­ti­tion is un­der con­sid­er­a­tion of Nepra. The tar­iff drawn out of all this mess-up will be passed on to con­sumers.

This sin­gu­lar project in the power sec­tor has in­voked much pub­lic re­sent­ment, bold me­dia cov­er­age and po­lit­i­cal point-scor­ing. The ju­di­cial com­mis­sion formed to in­ves­ti­gate the de­lays and cost es­ca­la­tion some years back sub­mit­ted its re­port in April 2015 stat­ing that, “The Min­istry of Law, Jus­tice and Par­lia­men­tary Af­fairs is re­spon­si­ble for caus­ing a de­lay in com­ple­tion of the doc­u­ments. The neg­li­gence on part of the ex­ec­u­tive author­i­ties has caused an ap­prox­i­mate loss of more than Rs 113 bil­lion to the na­tional ex­che­quer un­til 2012.” The fig­ure of 2015, it is an­tic­i­pated, will be dou­ble this fig­ure.

Rs 113 bil­lion is no small money for a coun­try sur­viv­ing on IMF loans. But, there is no ac­count­abil­ity of the state func­tionar­ies who in­flicted this loss on the na­tion. Nei­ther is there any ac­count­abil­ity for the team who mis­led the na­tion by al­low­ing the in­au­gu­ra­tion of a half-cooked project in 2014 whereas it is still not ready to be put on grid nor is there any re­al­is­tic time­frame avail­able for the same.

There are many Nandipurs in the closet and many in the mak­ing. With a poor state of gov­er­nance, bil­lions of ru­pees of pub­lic funds will con­tinue to be wasted and squan­dered while the peo­ple con­tinue to suf­fer and pay for all th­ese mis­deeds, The IMF will in any case con­tinue to be the life­line to sus­tain the na­tional econ­omy. The ques­tion is for how long?

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