PPIB to award Tarbela hydro project to Wapda

Islamabad: A four-member committee has recommended to the Private Power Infrastructure Board (PPIB) to award 960MW Tarbela extension hydro project to Water and Power Development Authority (Wapda).

Sources said the PPIB had constituted the committee comprising PPIB Managing Director, Additional Secretary (CF), the Ministry of Finance, Member (Water) Wapda and Hussain Ahmed Siddiqui (a board member), in its meeting held on September 20, 2008 to deliberate on the issue and present recommendations to it within two weeks.

The committee noted in its report that on the basis of infrastructure and other logistic support, the award of contract to Wapda, which was working on the project for years, can ensure early completion of this key power project and help Pakistan overcome growing electricity shortage.

The committee in its recommendations observed that Wapda was working on the project for last 8 to 10 years and award of contract to it will result in its early completion. It also noted that Tarbela Extension Hydro Power Project is an irrigation project and award of its contact to a private sector party can delay its completion.

Wapda had shown willingness to get Tarbela Extension Power Project contact. Wadpa chairman in a letter had submitted to the PPIB board that instead of handing over the project to M/s Tarbela Hydro Limited and Associate could delay completion of this key project.

The Wapda chairman's letter presented in the PPIB board meeting said: 'Tarbela dam project in of key importance for national economy, which demands its development in the public sector by Wapda.' The board was informed that in pursuance of its decision taken in 72nd meeting, the PPIB had issued notification of pre-qualification to M/s Tarbela Hydro Limited and Associates on November 8, 2007 and asked for performance guarantee (PG) within one month.

In response the sponsors (M/s Tarbela Hydro Limited and Associates) submitted PG with a request to incorporate a special clause in the Letter of Intent (LoI) regarding reimbursement of the feasibility study cost, in case the project is discarded by GoP after approval of the feasibility study.

The board was briefed about the provisions of 2002 Power Policy regarding hydel projects and reimbursement mechanism for cost of feasibility studies to sponsors in case or failure of tariff negotiations with the power purchaser.

It was highlighted that the project is under process for the last couple of years and it was being awarded to the private sector with explicit agreement and consent of Wapda. Non-award of project to private sector at later stage may have serious repercussions for GoP initiative to attract investment from private sector. The members stressed the need to thoroughly deliberate the implications of non-issuance of LoI after submission of PG by the sponsors.