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| June 23, 2005 | Thursday | Jumadi-ul-Awwal 15, 1426 |
Lakhra contract: Sindh govt’s clarification
KARACHI, June 22: A spokesman for the Sindh Department of Mines and Mineral Development, reacting to a news item appearing in Dawn’s issue of June 22, under the heading “Award of contract by Sindh questioned”, has stated that the report is not based on facts, as only one side of the story has been highlighted.
According to a press release issued by the department, the Lakhra Coal Development Company Limited (LCDC) was set up as a joint venture of PMDC, Wapda and the Government of Sindh in February, 1990, for the supply of coal to Wapda’s thermal power plant at Khanote. An area of 16,564.71 acres referred as “compact block” in the Lakhra coalfield was assigned to the LCDC in 1993. Later, Wapda dropped its programme of setting up a power unit in the area and it was to be set up by the private sector.
In 1993 the federal Ministry of Water and Power issued a letter of intent to Skoda Export for setting up a power plant. In the meantime, since the land and mineral belonged to Sindh, and Wapda had given up its programme, the Sindh government decided to have a joint venture through the Sindh Coal Authority with Skoda Export. The Government of Sindh, vide its letter No. EC(MD)1(61)/92 dated 24.11.1993, requested the federal Ministry of Petroleum and Natural Resources, for the surrender of excess area of coal lease of LCDC.
In the 14th LCDC board meeting held on May 5, 1994, it was decided that the land be assigned to the Sindh government. Since the company did not move any further, the Sindh government retrieved this area of 8,622.1 acres from the LCDC lease area and allocated it to Smith Associated Power and Mining Company and signed an MoU on Feb 19, 1995, for setting up of a power plant.
The LCDC in a meeting held on March 2, 1996, agreed to this action subject to determination of the area and its compensation by Smith Associated Power and Mining Company. The claim placed by LCDC/PMDC was an exorbitant amount of Rs4,294 million, which Smith Associated did not accept. Subsequently, this claim was worked out by the LCDC/PMDC for an amount of Rs250 million.
A lease deed for land in Lakhra for the development of a mechanized coal mine was executed on April 14, 1999, between Smith Associated and the Sindh Government. The Government of Pakistan issued on September 25, 2001, a letter of intent to Smith Associated allowing a feasibility study. Due to the September 11, 2001 incident, there could be no progress in this matter and as per advice of the panel of experts’ meeting held on 30.11.2002 formed by PPIB, the lease was cancelled w.e.f. 04.01.2003.
This area was reserved for potential foreign investment in power generation and offered to the PPIB on January 10, 2003, to entice foreign investment in this potentially viable area. The PPIB invited international expression of interest for the establishment of a coal-based power plant. The initial date of registration was extended to September 30, 2003. Out of the ten sponsors registered for the project only one company submitted pre-qualification documents up to February, 2004 and no progress was achieved.
On February 4, 2005 the managing director, PPIB, wrote to the Sindh government informing that the power sector players were hesitant to embark upon the offered opportunities in the coal sector owing to some non-promising results of the Wapda coal power project at Lakhra and requested that as the project was an integrated one, the investors had requested an extension in the deadline to June, 30, 2005, for submission of EOI. This extension was allowed on February 16, 2005. (On May 2, 2005, the Sindh Minister for Mines & Mineral Development wrote to the Federal Minister for Water & Power, Islamabad).
The Sindh Minister for Mines & Mineral Development visited Dubai and London for the road show in March, 2005 and then visited Ukraine, where an offer was made by Ukrainterenergo in agreement with Fateh Group to transfer technology and to carry out feasibility study for the development of an integrated coal mine and power project at Lakhra. Being fully aware that the efforts of the federal agencies and the PPIB had borne no substantial fruit, an MoU was signed by Ukrainterenergo, M/s Fateh Group and Sindh Coal Authority.
The Minister for Mines & Mineral Development, Sindh, wrote to the federal Minister for Water & Power on May 2, 2005 informing him that in his informal discussions with the managing director, PPIB, he was informed that despite their efforts expression of interest for the Smith area had not picked up and if the government of Sindh is able to get a proper offer the PPIB will be obliged to relinquish the area to the Sindh government.
The federal government was informed of the signing of an MoU with Ukrainterenergo with a request to issue instructions to the PPIB to release the area. On May 11, 2005, the Sindh minister informed managing director, PPIB, of the MoU, and since no feedback was received after the road show from the ministry or the PPIB of any potential offers, the Sindh government has withdrawn the Smith area and it stood reverted. A progress report was also placed before the prime minister on May 20, 2005.
The Department of Mines and Mineral Development is of the view that mineral resources of Sindh belong to the province and it is well within its rights to develop them and nothing has been done without the knowledge of the PPIB.
The procedure adopted for the licence and lease with Ukrainterenergo is exactly the same as adopted for Shenhua and AES Oasis (Pvt) Limited to which the PPIB has yet to object.
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