KARACHI: Work is under way to rehabilitate the inactive Defence Housing Authority (DHA) Cogen Power and Desalination Plant, Dawn learned here on Tuesday.

The plant, situated by the seaside in DHA Phase-VIII, developed several technical faults off and on soon after becoming operative. Ultimately it was shut down in 2010.

But according to a National Electric Power Regulatory Authority (Nepra) notification, DHA Cogen Limited now has devised a rehabilitation plan for which they have filed a fresh tariff petition with Nepra.

According to sources, there is now another power generation company called International Electrical Projects (IEP) that’s looking for a recommission of the plant from Nepra, because any plant after not being able to resume function for over one year is automatically decommissioned by the regulatory authority, which is what happened to the Cogen plant also.

Since the IEP is only a power generation company it will be selling the electricity it generates to the Karachi Electric Supply Company (KESC). It is for this reasons that they are seeking levelled reference generation tariff of Rs6.9284/kWh for the tariff control period of 25 years from execution of the power purchase agreement.

In the notification issued by Nepra, it is mentioned that a memorandum of understanding (MoU) has been signed between the generation company and the distribution company, i.e. KESC.

In order to rehabilitate the plant and make it fully functional within eight months, IEP is expected to spend some $51.500 million which it will borrow as loan from an Overseas Private Investment Corporation (OPIC) on six per cent per annum interest. The expected costs break up is $32.623 million for repaying the existing debt, $3.937 million for the mezzanine loan purchase and settlement of trade payable, $3.172 million as start up costs, $9.768 as rehabilitation costs, $0.5 (fee and expenses), $1.5 (interest during rehabilitation period).

The Cogen plant is a combined cycle natural gas-fired power plant with an associated seawater desalination plant. Its proposed gross capacity is 94MW and net is 80.3MW. The annual energy production is 457,228Mwh.

While Nepra has called a public meeting on Nov 28 to hear any objections or arguments regarding the matter before it can approve the proposals submitted to it by the power companies and fixes the tariff, a representative of KESC Shareholders Association pointed out that the announcement was not advertised in any of the major national dailies.

KESC Shareholders Association General Secretary Choudhary Mazhar Ali said the tariff being proposed was just too high as power was only a by-product of this plant with distilling water as its main function. He wished to know the conditions of the MoU signed between the power generation company and the power distribution company. “We need to know these conditions as everything happened very quietly. Also the notice was published by Nepra on Nov 14 in a paper with a very small readership. We almost missed it,” he said.