Rs 51.7 billion benefit to PQEPCPL: TI Pakistan urges Nepra chief to take officials to task

Transparency International (TI) Pakistan has urged Nepra Chairman Brigadier Tariq Saddozai (retired) to take action against those officials who reportedly allowed financial benefit of Rs 51.7 billion to Port Qasim Electric Power Company (Private) Limited (PQEPCPL). In a letter, Transparency International said that it has not received any response from Nepra to a letter written on September 12, 2015 against collusion of Nepra and PQEPCPL in determining tariff for 2x660 MW coal power plant.
Nepra was provided documents from the complainant, with proof of fake bidding by PQEPCPL in the tender notice invited by PQEPCPL for 'EPC of coal-unloading jetty and channel for Pakistan Port Qasim coal-fired power project contract basis published on June 18, 2015.
The complainant has again approached and sent following more proofs of allegations on collusion of Nepra and PQEPCPL: (i) Land was provided by PQA to PQEPCP at Rs 2.5 million/acres, against official rates of Rs 6.5 million per acres, as charged to LNG terminal in 2014, and coal terminal PIBT in 2010, causing loss to exchequer of Rs 900 million; (ii) tender for coal jetty was awarded by PQEPCP to its own partner at more than about $250-360 million, through non transparent tendering; (iii) the actual cost of coal jetty is not over $150 million, including cost of 7 million cubic meter dredging; and (iv) the actual cost of dredging of about 7 mcm in the following area at $5/cm is not over $35 million. In KPT tender in 2010 for 30 MCM the rates were $4 per cm with disposal of up to 15 KM, and oil was $130 per barrel, and now it is $28 per barrel. Oil consumption in Dredger is 60 percent of the cost. PQA in recent tenders in 2016 for about 3 mcm maintenance dredging has received dredging rates at about $3 per cm.
According to Transparency International, Agha Jan Akhtar PQA Chairman on January 10, 2015 had declared that PQEPC is spending $200 million on dredging, which is free to PQA, and cost of land thus increased by Rs 8 million/acre. He said the land had been given to company at Rs 2.5m per acre and he had given a detailed briefing to the NAB.
The project company would have to spend around $200m in dredging, effectively increasing its cost beyond Rs 8 m per acre. The inflated cost of 7 mcm dredging by at least $165 million (in case news report on the statement of Agha Jan Akhtar, Chairman PQA is correct), plus further inflated cost of $50-80 million, will be reflected in revised tariff of coal power plant by Nepra at the time of COD. The cost of port handling taken by Nepra in its determination in February 2015 is highly inflated, at $9.46/T. The current port cost in PQA and KPT is not over Rs 320 per ton ($3/ton).
Transparency International said that PQA and Nepra in order to give undue benefit to PQEPCP are involved in over pricing of coal jetty by at least 100 percent. The actual cost of coal handling at common jetty facility in KPT and PQA is not more than $4.5 per ton. Thus the coal price will be reduced by at least 3.5 percent. Nepra on February 13, 2015 notified tariff which for 1 to 10 years is 9.0642 cents/kWh, and levellised tariff for 1 to 30 years is 8.3601 Cents/kWh. Out of total tariff for 1st year of Rs 8.8014/kWh, fuel cost is Rs 4.2913/kWh, at total imported coal price $129.06/ton. Therefore the tariff will be reduced by Rs 0.15/kWh due to decrease in cost of common jetty facility. PQEPCP will earn revenue from the common jetty as this is not exclusive for its own use, though entire cost is charged to the project. Transparency International has claimed that on 1320 MW, extra tariff charged is Rs 1.73 billion at 100 percent efficiency due to decrease of common jetty cost by 0.15/kwh and in 30 years extra payment made to PQEPCP at public cost is Rs 51.7 billion at 100 percent efficiency.