Govt's plan to inject extra 1,500 mw in system hits snags

Islamabad: The government plan to inject an additional 1500 MW thermal power in Wapda and KESC systems on a fast track basis has hit snags as tariff offered by most of the companies is on the higher side, sources close to the PPIB Managing Director said.

Sources said a committee headed by Wapda Chairman Shakeel Durrani has negotiated tariff and commissioning period with the qualified companies.

Only a few companies agreed to reduce the tariff; the others remained reluctant. There were reports that the PPIB made efforts to finalise a 'deal' with unqualified companies with incomplete documents, but it failed to succeed due to the presence of other ministries' officials in the committee, the sources added.

Giving the background, the sources said that the federal cabinet on May 14, 2008 approved solicitation for fast-track power generation projects through International Competitive Bidding (ICB).

According to package-A 1000 MW has been proposed from IPPs within Pepco jurisdiction; whereas package-B is based on rental power plants. Initially it had been proposed that 200 MW should be arranged through rental and barge mounted plants near Karachi but later on it was increased to 500 MW.

Subsequent to the cabinet meeting, the Minister for Water and Power held a meeting with the Minister for Petroleum, Secretaries of the Ministry of Water and Power, Petroleum, Environment, MD PPIB and discussed the strategy for implementation.

The sources said projects were advertised on May 17, 2008. Request for Proposals (RFP) issued to 42 interested parties (29 for Package-A and 13 for Package-B) by PPIB. The last date of bid submission was July 15, 2008. Technical proposals of 12 received bids (9 for Package-A and 3 for Package-B) were opened on the same day for 3,738 MW capacities.

The financial and tariff bids of responsive bids were opened publicly on August 2. In accordance with the GoP guidelines for determination of Tariff for IPPs, the competent authority constituted a bid evaluation committee comprising representatives from the PPIB, Wapda, Nepra and the Finance Ministry.

The report of bid evaluation committee was discussed in a meeting on August 23, 2008 chaired by the Minister for Water and Power in the presence of Wapda Chairman, Managing Director Pepco, Managing Director PPIB and General Manager WPPO and other PPIB officials.

A committee under the Wapda Chairman with Managing Director Pepco, Managing Director PPIB and General Manager WPPO was constituted to negotiate tariff rates, Rate Of Equity, Commercial Operating Date (COD), etc with short-listed bidders. The committee met on 25 and 26 August with the bidders requesting to review their tariff and commissioning date. The sources said a meeting of special cabinet sub-committee was thereafter held on August 28 to finalise the selection of these projects.

The committee was told that power dispersal from Karachi to the Pepco load centres from the proposed LPG power plants will not be possible in the initial two to three years due to transmission constraints and power from these lPPs may have to be absorbed by KESC during this period.

The offers of LPG-fired IPPs to be installed by Progas (305 MW) and Cavalier Energy (470 MW) under package (Package-A) in Karachi and one rental power project (Package-B) to be installed by Karkey (231.8 MW) at Karachi were agreed in principle.

However, the cabinet sub committee advised the Wapda Chairman along with a team of Secretary Petroleum, MD PPIB, MD Pepco and GM WPPO to further discuss the reduction of tariff and adjustment of commissioning date with the bidder for package-A and the higher bidder (Walters) for Package-B.

The sources said, in the meeting with Progas (Package-A) on August 29 the company offered reduction of 0.053 cents/kWh by lowering its tariff to 14.47 cents/kWh, which made it close to Cavalier Energy offer. During meetings with Creative Energy Resources and Attock-Wartsila Consortium f