The Private Power Infrastructure Board (PPIB) is being forced to issue Letters of Interest (LoIs) to a few companies, violating the criteria set by the Board, sources told Business Recorder. Initially, two 425 MW dual-fuel power projects are said to be cleared for LoIs, one of which will be the joint venture of Saif Group, and the other will be established by Senate Holdings of Mian M Sharif, a London-based Pakistani businessman, they said.
According to details provided by a Board member, Mian Sharif met Pakistan High Commissioner in London and showed interest to invest in the power sector. Subsequently, in a meeting at PPIB in November last, he was briefed about the salient features of power policy and was clearly informed that main constraint in processing of gas-based projects was non-availability of gas.
Senate Holdings through Mian Sharif submitted a proposal in December last for setting up 225 MW gas-based combined cycle power project at Bhikki, near Sheikhupura, using gas from SNGPL. But PPIB could not process the proposal as the sponsors had not submitted detailed proposal, including pre-qualification details, and had provided no commitment of gas supply.
However, the sponsors asked the Board to keep the proposal pending till the availability of gas for the project could be confirmed.
Meanwhile, on December 23, 2004, the Board decided that "in future, power projects will only be awarded on ICB basis wherever pipeline quality gas is available, or a feasibility study has already been prepared. Same will apply to oil and dual-fuel projects".
Board's top brass claim that the sponsors were not aware of this decision. They met Pakistani delegation in London on March 3 last, during the private sector's sponsored road show of PPIB, headed by the Minister for Water and Power, and agitated over the attitude of the Board.
When it was felt that the issue could take another colour, especially when the country's High Commissioner was fully involved, Pakistan's delegation bowed down and allowed the sponsors to submit detailed proposal.
Sources said that when the issue was brought before the Board meeting some members openly opposed the proposal, saying that it would be considered as favouritism, but the top brass got the approval, saying that the country would be facing power shortages very soon.
The second project of 200 MW was being sponsored by Saif Power Limited (SPL), which submitted a detailed proposal along with the Statement of Qualifications (SoQ) at Sahiwal.
The Board claimed that the consultant hired by PPIB pre-qualified the SPL, and the SoQ evaluation committee also endorsed the findings of the consultant, sources said.
SPL Chairman Javed Saifullah was also an initial shareholder in Security Electric Power Company (Sepco), which was issued a Letter of Support (LoS) by PPIB in 1994 for a 310 MW power project at Jamshoro. But Sepco could not achieve financial close within the stipulated time, and PPIB encashed the bank guarantee of Sepco. Later, Sepco approached Wafaqi Mohtasib who dismissed its complaint, declaring termination of Implementation Agreement (IA) and encashment of bank guarantee by PPIB in accordance with the legal and contractual obligations.
PPIB, sources said, did not take care of previous record of Sepco on the pretext that pre-qualification criteria did not bar issuing a LoI or LoS to any sponsor which had entered in litigation with the Board.
The issue was discussed in detail in the Board meeting and the project was approved, despite strong opposition by some members, sources said, adding that the Board was now taking politically motivated decisions.
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