Prime Minister Nawaz Sharif has decided to undertake his first official visit to the much-delayed 425-megawatt Nandipur Hydropower Project on Saturday (tomorrow) to witness physical development work, officials told Business Recorder on Thursday. In his budget speech, Finance Minister Ishaq Dar had mentioned that this cost-effective power project with an initial cost of Rs 23 billion, was a victim of "criminal negligence", adding that its machinery had remained stranded for the past three years for want of clearance of certain documents from various government departments.
According to him, the cost had now risen to Rs 57 billion. "We have taken immediate cognisance of this situation and are making necessary efforts to have the documents released and obtain fresh approval from the competent fora. As soon as these are in place in the next few weeks, work on its reconstruction will start immediately and be completed in 18 months," he said. Finance Minister also announced that elements responsible for inflicting such a huge financial loss to the national exchequer would be brought to justice.
Ministry of Water and Power recently informed the Supreme Court that several meetings had been held between officials of the ministries of finance and water and power over the issue. In March this year, the Ministry of Finance, then headed by Salim Mandviwala, did not allow the project to be taken up in the Economic Co-ordination Committee (ECC) of the Cabinet contending that it should not go through without the ministry's formal comments.
The sources said Engineering, Procurement and Construction contractor had already served a notice of termination of the contract on the project authorities, adding that the former Managing Director of the Gencos Holding Company did not support the project. The sources said that a summary prepared by the Ministry of Water and Power on February 12 this year was on the agenda of the ECC meeting held on February 26 under the chairmanship of the then Finance Minister, Saleem Mandviwalla. However, the Finance Ministry opposed the summary after which the sponsoring Ministry withdrew it. The Economic Co-ordination Committee (ECC) of the Cabinet in its meeting on February 22 also did not take up a summary on the grant of sovereign guarantee of Rs 23.496 billion. The sources said the Engineering Procurement and Construction (EPC) contractors had already served a contract termination notice to Water and Power Development Authority (Wapda) because of delays in decision-making at the government level.
This issue is already pending in the Supreme Court and a Commission had accused former law minister Babar Awan of delaying clearing some issues. According to official documents, additional funding of Rs 23.496 billion now need to be arranged from a syndicate of local banks for resuming the construction activities and to complete the remaining work of the Combined Cycle Power Plant (CCPP) Nandipur. Financing facilities from the Export Credit Agency (ECA) could not materialise because of an inordinate delay in the fulfillment of various conditions.
Moreover, a waiver of demurrage and detention charges up to June 30 this year against equipment and material lying at Karachi ports was also required for their release and shifting to site. As per revised PC-1 (under the approval process), the estimated cost of project is Rs 57.380 billion, out of which Rs 14.734 billion has been utilised from Pepco/ NPGCL's own resources.
Remaining amount of Rs 42.646 is to be funded through debt of which Rs 19.150 billion has already been committed by a syndicate of local banks. Issuance of sovereign guarantee against this amount has already been approved by the ECC. Balance debt of Rs 23.496 billion is yet to be arranged either from local or foreign banks. The sources said that against estimated amount of demurrage and detention charges till June 30, 2013, waiver of Rs 1.729 billion up to August 31, 2012 has already been accorded by the ECC of the Cabinet. The balance amount of the charges is Rs 786 million up to June 30, 2013 which also requires an ECC waiver.
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