Power ship at Korangi: Turkish company submits $80 million guarantee

Turkey-based company, Karkey, has submitted advance payment guarantee, amounting to $80 million, for the power ship dedicated for Pakistan to provide electricity to genco-IV through Karachi Electric Supply Company (KESC) network at Korangi thermal power station.
The world's largest power ship, called 'Karadeniz Power Ship Kaya Bey', coming from Turkey to Karachi, owned Karkey Karadeniz Elektrik Uretim AS, will meet power shortage in the business hub of the country, Karachi.
"As per the sequence of events, Karkey first submitted the Performance Guarantee in the required amount of $1.2 million before it was issued the Letter of Award, and submitted the Advance Payment Guarantee worth $80 million before receiving agreed advance amount, a company official said here on Friday while taking to this scribe.
Guarantees have been issued by Citibank Pakistan and are valid up to 31 December 2010. Moreover, the advance paid by the government is recoverable against monthly rental charges to be paid by the government. Thus, all moneys paid to Karkey to date are fully recoverable.
Company official said that Karkey had followed legal modalities for the award of the contract and had procured Request for Proposal (RFP) and submitted valid bid covering required technical and financial credentials.
Karkey entered into the Rental Services Agreement in form, which is in accordance with the draft contract attached to the RFP. Even in an IPP payments begin on Commercial Operation, as is the case with the RPPs.
The IPPs have a term of 25 to 30 years in which they recover their investment and return thereon. In the case of the RPPs, these are 3 to 5 years contracts and thus cannot be compared with the IPPs.
Karkey went through a detailed study and procured approval from the Environmental Protection Authority, Sindh. Earlier, the site allocated to Karkey was Mauripur, which was not feasible on environmental grounds and, therefore, Karkey Rental Services Agreement was amended to accommodate change of site to Korangi, where the power ship is scheduled to arrive during the current month.
Karkey is part of the Karadeniz Group, which, for the past 60 years, is well known in Turkey. It is involved in business of energy, finance, tourism and mining. The energy business is conducted through the Karadeniz Energy Group, which was established in 1996 and through its subsidiary or affiliate companies owns power plants of installed capacity of 925 MW, out of which 625MW is installed on power ships. These companies supply electricity to airports (Istanbul, Ankara, Izmir, Antalya), retail markets, banks, GSM operators, metro and rail transportation, the official added.