Prime Minister Yousuf Raza Gilani is all set to ink the first-ever power sector pact of his government with a Chinese company, Dong Fong, here on Monday (today) for setting up 525 MW thermal power plant with an investment of $450 million at Chichoki Mallian (Sheikhupura), sources close to the Private Power Infrastructure Board (PPIB) managing director told Business Recorder.
Sources, however, expressed serious concern over the cost escalation, saying the project cost could have been negotiated by a team of experts. The Dong Fong was already in the process of setting up thermal power plant of 450-500 MW at Nandipur (Gujranwala), though several questions had been raised by the Euro Dynamics International, a Lahore-based firm, that the second lower bidder joint venture of Chinese company does not meet the qualification and requirement of combined cycle plant.
Earlier, former prime minister Shaukat Aziz had signed a memorandum of understanding (MoU) with the Qatar Investment Authority (QIA) and the Alstom-Marubini to set up 450-500 MW thermal power plant at Chichoki Mallian, but a couple of months ago, the pact was terminated when the sponsors did not come up with tariff petition.
The ECC, in its meeting on October 31, 2007, had directed the Ministry of Water and Power to issue a notice to the proposed sponsors, including the Alstom-Marubini and the QIA to come up with a deadline as to when they intend to file an application to the National Electric Power Regulatory Authority (Nepra) for tariff fixation and project completion to avoid any further delay.
The Government of Pakistan had sent several letters to QIA for this purpose, but they did not pay any heed despite the fact that gas allocation deadline of November 30, 2007, had expired.
Now the government has decided to award the contract to Dong Fong on the same terms and conditions applicable to 450-500 MW combined cycle power plant at Nandipur, the sources maintained. An official told this scribe that the Chinese company would complete the project within the estimated cost of $330 million.
Sources said that initially the Investment Division, which saved the deal was handling the project, but later on it was transferred to the PPIB. They said that a ceremony would be held in the Prime Minister House on March 31 to be attended by the Chinese dignitaries and local officials.