All-risk insurance of Guddu plant: MoC asks NICL to comply with PMO’s directives

ISLAMABAD: Commerce Ministry has directed National Insurance Company Limited (NICL) to immediately comply with directions of Prime Minister Office (PMO) on all-risk insurance of 747-MW, Combined Cycle Power Plant (CCPP), well informed sources told Business Recorder.

The Board of Directors (BoD) of Central Power Generation Company (Genco-II) has already sought permission from the Power Division to obtain all-risk insurance of Guddu Combined Cycle Power Plant (CCP) from the market through competitive bidding as NICL failed to fulfil performance benchmarks.

The Central Power Generation Company has written at least five letters regarding the ongoing all-risk insurance case of CPCCL assets.

According to Chief Engineer/ Technical Director, CPGCL, Sadar Uddin Khuhro, during the process of tendering for all-risk insurance cover, CPGCL assets obtained minimum risk cover under Hold Cover arrangements after the payment of a huge amount of Rs 78 million from time to time ending March 2021.

All-risk insurance of Guddu plant: Genco-II board seeks PD’s permission

He said, NICL is well aware that the operation of the power plant is suspended till the all-risk insurance cover is provided by the company (NICL), consequently, the CPGCL is bearing approximately financial loss of Rs.70 million every day. Moreover, the CPGCL has also faced two major accidents at 747MW power plants assets during the unsuccessful procurement process of insurance by NICL; resultantly, the national exchequer has borne the loss of billions of rupees.

CGGCL has already shown grave concerns for the delayed response and failures of NICL in getting insurance cover with the worst experience in the past. In this regard, the last tender was opened on November 24, 2022 wherein no bidder participated. The outcome of the unsuccessful tender was shared by NICL through email on December 5, 2022. In response, CPGCL immediately requested to initiate re-tendering process. Besides repeated requests NICL failed to float the tender again even after the lapse of two months.

CPGCL, in its letter once again requested that: (i) the tender on the all-risk insurance may be floated urgently on war footing basis;(ii) an interim all-risk insurance cover may immediately be provided or (iii) issue NOC for interim all-risk insurance cover from open market.

The sources said, the concerned authorities have failed to bring NICL’s lacklustre response to the notice of Prime Minister Office which subsequently directed Commerce Ministry to get the issue resolved. However, the issue remains unresolved.

According to sources, Commerce Ministry has referred to the direction of Prime Minster Office wherein NICL has been directed to ensure provision of insurance cover to power plant in the wake of fire incident which occurred at Guddu thermal power plant on July 10, 2022.

Commerce Ministry in its letter has directed CEO NICL to comply with the directions of Prime Minister Office under intimation to Commerce Ministry.

Since the CPGCL is a federal government-owned entity, it can only get risk insurance from M/s NICL, as per the Section 166(2) of the Insurance Ordinance, 2000. The Board also noted that since 2014, the CPGCL’s management has made numerous efforts, and vigorously pursued the matter to get the insurance for 747MW CCPP; however, both the NICL and PRCL failed to provide, or procure the requisite insurance coverage on CPGCL behalf, the sources added.

Copyright Business Recorder, 2023