ISLAMABAD: The Senate Standing Committee on Economic Affairs directed an inquiry on Friday into the nearly five-year delay in completing one unit (660 MW) of the 1320MW Jamshoro Power Plant, after senior officials of the Economic Affairs Division (EAD) shifted the blame to the Power Division and its attached entity Genco Holding Company Limited (GHCL).
The Committee, chaired by Senator Saif Ullah Abro, was briefed that the first unit of 660MW, work on which began in 2014, was originally scheduled for completion in 2019.
However, it is now expected to achieve its Commercial Operation Date (COD) in the third week of this month, with a total cost of $680 million. The actual cost of the project has risen to Rs 1.74 billion.
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The Committee also directed the Power Division to launch a separate inquiry into the Guddu 747 power plant, which was delayed in 2021, in order to recover the doubled liability, now exceeding Rs 10 billion from M/s GE.
The Asian Development Bank (ADB) provided full financing for unit-1, but it is unclear whether the second unit is still in the plan or has been shelved.
The Special Secretary of the EAD stated that while the EAD had arranged the financing for the project, the delay was due to the Power Division’s actions. He recommended that the Power Division also be subjected to an inquiry. However, the Committee Chairman indicated that the EAD should take the lead and pass the findings to the Power Division.
EAD officials defended Minister for Economic Affairs Senator Ahad Cheema against criticism of his repeated absences from Committee meetings. They explained that they had written to the Power Division multiple times, urging the completion of the project due to its financial commitments. They also supported the idea of an inquiry to uncover the reasons behind the delays.
The Chief Executive Officer (CEO) of Genco Holding Company Limited briefed the Committee, explaining that the power project was ready in August 2024 but was delayed due to faults in water pumps. Additional delays in COD were caused by transmission line availability issues and a reduced electricity demand in the country, as the government is required to prioritise electricity from must-run plants.
Senator Kamran Murtaza pointed out that it took two and a half years to award the contract for the project. EAD officials clarified that while the loan agreement was signed in February 2014, the contract was only awarded in 2018.
“We have written to the contractor about delays due to faulty pumps. However, some of the delays were on our part. We will meet with the contractor to discuss deductions for the financial costs caused by the delay in installing the faulty pumps,” the CEO of GHCL added.
Senator Kamran Murtaza also sought clarification on the financial penalties for delays, suggesting that future projects should include a local arbitration clause to avoid costly foreign currency financial penalties.
The Committee was informed that 16 projects are currently under way in the power sector, with support from international organisations. Eight of these projects are financed by the ADB, seven by the World Bank, and one by the Islamic Development Bank (IsDB).
Regarding the financial impact of delayed or dropped projects, EAD officials stated that no financial loss occurs if a project is dropped before the official process begins. However, if a project is abandoned after the process starts or is delayed, it results in a financial loss.
Senator Saifullah Abro instructed officials to investigate the reasons behind projects being dropped from the pipeline. The Committee Chairman remarked that Pakistan is the only country in the world that ‘celebrates’ securing loans.
The Committee also emphasised that the Economic Affairs Division should ensure strict checks and balances on the usage of loan amounts. Any project financed through loans should be completed within the stipulated timeframe.
Senator Saifullah Abro also highlighted the construction costs of several major power plants, Jamshoro Power Plant cost $1.2 billion, the Sahiwal Power Plant $1.8 billion, the Hubco Power Plant $1.7 billion, and the Port Qasim Power Plant $1.9 billion. He noted that the second unit of the Jamshoro Coal Power Plant was not installed because its cost was lower than that of private sector plants. He suggested that additional profits should be generated from these power plants.
Furthermore, the Committee discussed all the ongoing projects by the Provincial Government of Sindh under multilateral, bilateral partners, and UN agencies. Officials apprised that a total of 30 projects are ongoing under this framework, of which 14 projects are with the World Bank, 6 projects are with the Asian Development Bank, 3 projects are with the Islamic Development Bank and OPEC Fund, 3 are with Japan, and 1 project each with AIIB, the European Union, and USAID. The total commitment for these projects is 5,042.87 million USD.
While discussing the Sindh Solar Energy Project, which is funded by the World Bank, officials stated that the project aims to transform government buildings into solar energy and distribute 2 million solar units among poor families. The Committee raised concerns about the criteria followed for the selection of individuals and recommended that a fair criterion should be followed for this process.
The Committee recommended the officials of provincial Government of Sindh to provide the information related to the criteria followed for the selection of individuals to the Committee. It also recommended providing the data as per district distribution to the Committee. It recommended that rural areas of Sindh province needs to be given priority or focussed for the project.
The Committee recommended providing list of beneficiaries along with their addresses to the Committee. It unanimously decided to review all ongoing and completed projects (sector-wise) by provincial government of Sindh under multilateral, bilateral partners and UN agencies in the next Committee meeting.
In attendance were Senators Kamran Murtaza, Haji Hidayatullah Khan, Falak Naz, Special Secretary for Economic Affairs Division Muhammad Humair Karim, Additional Secretary for Economic Affairs Alam Zeb Khan, Managing Director NESPAK Muhammad Zargham Eshaq Khan and other senior officials from the concerned departments.
Copyright Business Recorder, 2024
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