Uch plant security cover expanded

Published Jul 05, 2011 10:03pm

Officials said the UPL had been seeking additional security under an implementation agreement, but four rockets fired from a distance of 10km on Jan 15 had forced the government to oblige the company in view of an upcoming 404MW Uch-II project with an investment of $495 million. — File Photo

 

ISLAMABAD: Faced with the possibility of closure of the 586MW Uch power plant in Dera Murad Jamali in Balochistan, the government has decided to provide additional security cover extending to the 10-km radius of the plant. The cost of the enhanced security would be passed on to consumers through a 'pass through item' in electricity tariff, a senior official of the water and power ministry told Dawn on Tuesday.

He said the plan had been approved last week at a meeting of the Economic Coordination Committee (ECC) of the cabinet, presided over by Water and Power Minister Syed Naveed Qamar.

Besides the security expansion, sponsors of the Uch Power Limited (UPL) have been allowed to develop underground fuel storage for diesel. Its cost will be borne by the company, but the government has agreed to reduce its mandatory fuel storage from seven to five days. According to sources, the running expenditure of additional security cover would be about Rs6 million per month, besides a one-time establishment expense of about Rs20 million. Currently, about 52 Levies personnel are providing security to the UPL in Nasirabad district of Balochistan, where the project has been operational since 2000.

Officials said the UPL had been seeking additional security under an implementation agreement, but four rockets fired from a distance of 10km on Jan 15 had forced the government to oblige the company in view of an upcoming 404MW Uch-II project with an investment of $495 million.

One of the rockets exploded between two fuel tanks filled with more than 14 million litres of diesel.

The company is required to spend up to $100,000 per year as security expenditure but claims that the limit has already been exhausted.

The security plan provided by the Frontier Constabulary for UPL will complement the Levies deployment in 6km periphery and other security measures being adopted for securing OGDCL installations in the area, according to official record. The water and power ministry had informed the ECC that providing additional security was obligatory for the government under the implementation agreement and warned that its violation would not only result in leaving the UPL power complex vulnerable to sabotage having huge financial repercussions and outage of 586MW, but also lead to the termination of agreements and hamper the forthcoming expected investment of $495 million in the Uch-II project.

Earlier, the UPL had informed the government that it could not expose its staff to security problem and hence be “constrained to close down the UPL complex and invoke a Pakistan Political Majeure Event”.

The ministry of finance had sought separation of the existing expenses on security and maintenance and additional cost so that its tariff could not unnecessarily be loaded with non-transparent expenses. The request was rejected. The additional security arrangements would remain in place till the security situation improved around the UPL.

The officials said the company at its own had moved to reduce the risks of high-level damage to the power complex by starting construction of underground fuel tanks in 12 months. During this period the existing tanks will be emptied and force majeure event during re-building process of fuel tanks will be treated as other force majeure event for first seven days.

Owned jointly by US-based Tanaska, Hawkins Holdings and Midlands Power and funded mostly by US financial institutions and the World Bank, the UPL is a low BTU-fired power project, currently an average tariff of about 1.54 cent per unit -- perhaps the cheapest after some of the hydropower projects.


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