The government has once again sought an increase of more than 44 percent in the previously approved cost of this beleaguered power plant in its revised petition filed with Nepra to seek a tariff increase. The request is once again tied to the threat, that, in absence of the additional tariff increase, the project will not sustain and shall collapse as it is already on the verge of bankruptcy and is unable to recover costs incurred and will default in its payment to the lenders.
The Nandipur power project is just one example to demonstrate the apathy of state governance and how projects in the public sector are ruthlessly handled - riddled with mismanagement, incompetence, corruption, misuse of public funds and utter disregard of public interest. Even projects starting on sound technical and financial viability, like Nandipur itself, are messed up during execution stages due to the reasons cited above. Nandipur is best fit to be taken up as a case study to make transparent the ills of the state governance and to showcase the level of care the government voted to power by them has for them, if any.
Nandipur was well wrapped up in 2008 at a cost of Rs 23 billion ($350 million) and was handed over to the PPP government as a power project ready to go and bring on grid 425 MW of power by 2010. During the whole of the tenure of the last government there was no movement and for over three years the plant was let to rot at Karachi port for want of documentations and legal compliance. In the meantime, the demurrage at port and interest payable to lenders kept on escalating while the public continued to suffer and at best venting out their anger through public protests and self-destruction.
The PML government decided to pull out the plant from the port in a desperate attempt to bring on grid additional power to ease the power crisis and inch up somewhere nearer in fulfilling its promise to the people for relief from load shedding. But, they went out too much in haste, probably misguided by the technical team on ground. In May 2014, a bit ahead of feared summer load-shedding, PM Nawaz Sharif inaugurated the Nandipur plant giving hope to the people that the additional power on the grid would ease the load shedding. This never happened and the load shedding in the summer of 2014 was as bad as in 2013 if not worse.
Nandipur is still too far away to be on the grid, if it all happens. The premature inauguration of the plant in May 2014 was a big mistake perhaps done on the un-professional technical advice and over-commitment of the plant team. It is reported to have been then operated in haste for the inauguration on diesel fuel rather than on the prescribed furnace oil as the furnace oil treatment plant was still under shipment. It is like trying to run a petrol car on diesel; you mess up the engine. Further, the protocols demand that after the satisfactory completion of installation and commissioning works, the plant is subjected to closely monitored test runs and certification process witnessed and certified by the regulators and manufacturers. On completion of all these protocols, the certificate of Commercial Operational Dispatch (COD) is issued. It's now over 15 months since the plant was inaugurated and we are nowhere near a COD.
In the meantime, the government is attempting to convert the plant to natural gas and add 100MW to its installed capacity of 425MW. One is not sure of the technical viability of the said conversion nor the surety of gas availability nor its benefit to consumers, but, one is sure that this addition financial burden and the further delay in COD will defiantly mess up the already messed up financial feasibility of the project.
In April 2015, Nepra approved an overall cost of Rs 45 billion for Nandipur project. The government now in its regulatory fillings has put up a request to jack it up to Rs 65 billion. The petition is under consideration of Nepra. The tariff drawn out of all this mess-up will be passed on to consumers to sustain.
This singular power project in the power sector has invoked much public resentment, bold media coverage and political point-scoring. The judicial commission formed to investigate the delays and cost escalation some years back submitted its report in April 2015 stating that, "The Ministry of Law, Justice and Parliamentary Affairs is responsible for causing a delay in completion of the documents. The negligence on part of the executive authorities has caused an approximate loss of more then Rs 113 billion to the national exchequer until 2012". The figure of 2015 will be double of this figure.
Rs 113 billion is no small money for a country surviving on the IMF loans. But, there is no accountability of the state functionaries who inflicted this loss on the nation. Neither is there any accountability for the team who mislead the nation by allowing the inauguration of a half-cooked up project in 2014 whereas it is still not ready to be put on grid nor is there any realistic timeframe available for the same.
There are many Nandipurs in the closets and many in the making. With a poor state of governance billions of public funds will continue to be wasted and squandered while the public continue to suffer and pay for all these misdeeds while the IMF shall continue to be the life line to sustain our economy. The question is for how long?
(The writer is Chairman Avant Ventures and former President OICCI and ABB Pakistan)