The Economic Co-ordination Committee (ECC) of the Cabinet which is schedule to meet on Tuesday (today) with Finance Minister, Senator Ishaq Dar in the chair is expected to resolve the issue of demurrages charges of $70 million being demanded by the Chinese company and EPC contractors of 425 MW Nandipure Hydropower, well informed sources told Business Recorder.
The ECC, in its first meeting held on June 27, 2013 considered a summary from the Ministry of Water and Power requesting for issuance of government guarantee for the additional cost of Rs 23 billion that the project has suffered in the past due to negligent delays in clearance of documents.
In view of the significance of the project in meeting the critical shortages in the power sector the ECC approved provision of Letter of Comfort (LoC) that will allow the EPC contractor to remobilize and complete the project within the shortest possible time. Ishaq Dar, in his budget speech, had revealed that the highly economical power project, Nandipur, which initially had a cost of Rs 23 billion, was a victim of criminal negligence and its imported machinery has remained stranded for the last three years for want of clearance of certain documents from government departments. Today, its cost has risen to Rs 57 billion.
The PML (N) government took immediate cognisance of this situation and is 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 construction will start immediately and be completed in 18 months. The Finance Minister also announced that all those responsible for inflicting this phenomenal loss on the nation shall be brought to justice. The sources said, Ministry of Water and Power recently convened a meeting with the M/s Dong Fang Electric Corporation of China (DEC) and GEC - EPC contractors to resolve the dispute which demanded $70 million as demurrages charges from the GoP.
The Ministry of Water and Power, sources said, which was silent in the past over this project, did not agree with the figures of demurrages presented by the DEC and GE and requested them to revise the figures down, however, both the companies refused to honour the request of Water and Power Ministry.
Official documents show that the ECC meeting was informed on July 20, 2011 that for installation of the 425MW Combined Cycle Power Plant at Nandipur, Gujranwala, at an agreed EPC price of $329 million, to be executed by Dong Fang Electric Corporation (DEC) Ltd, China, the Ministry of Finance was required to provide GoP guarantee for the loan amounting to $329 million (EPC contract price) with a foreign currency component of $164.9 million and 78 million euro and local component of Rs 3.0 billion. According to documents, project L/Cs for Rs 19.150 billion (equivalent to $148 million and 70 million euro being 90 percent of EPC price) were opened on September 15, 2008 by HBL and NBP syndicate in favour of DEC China, along with a loan of Rs 5.3 billion to meet the local currency requirement, with the support of Ministry of Finance.
The Supreme Court of Pakistan on June 21, 2013 had given one week's time to the government, the respondent in the petition, to explain the delay in the execution of Nandipur and Chicho-ki-Malian power plants. The respondents in the case included Babar Awan, three former law secretaries, including incumbent Federal Shariat Court Chief Justice Agha Rafiq, Election Commission of Pakistan's member former Justice Riaz Kayani and Masood Chishti.
The respondents were told to file replies to former Justice Rehmat Hussain Jafferi Commission for delaying the approval for shifting of machinery for Nandipur and Chicho-ki-Malian Hydropower plant from Karachi port during their tenure, causing loss of Rs 113 billion to national exchequer.
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