KARACHI, Nov 28: The National Electric Power Regulatory Authority (Nepra) held its second hearing in two days on Wednesday, this time to discuss the issue of rehabilitation of gas-fueled Cogeneration Plant in the Defense Housing Authority (DHA).

Right at the outset of the hearing at the National Institute of Management Karachi auditorium, Nepra’s acting chairman Shoukat Ali Kundi asked the petitioner, International Electric Power (IEP), why it wanted modification of tariff when the tariff for sale of power for the DHA plant had already been settled back in 2005 for 25 years.

When the petitioner pleaded that they were requesting modification in view of all the money and work that was to go into the plant’s rehabilitation, they were reminded that their petition did not mention the word ‘modification’ anywhere. So the matter was being heard only as an issue and not a petition.

Peter J. Dailey, chairman and CEO of IEP, explained in his presentation that in order to rehabilitate the plant and make it fully functional, his firm would need to borrow money from a US entity, the Overseas Private Investment Corporation (OPIC). The amount said to be US $51.500 million was being borrowed for six per cent per annum interest.

He explained what had gone wrong with the plant and the causes leading to its shutdown for the past three years along with the kind of work involved in making it fully functional.

According to Mr Dailey, the previous owners of the plant, Sacoden Investments Limited and AEI Energy International had burned down the plant’s combustion turbine through rough use. “But it is after all an engine which can be fixed. And we will do that but not by engaging its manufacturers Siemens this time as their design was not good to begin with. The plant is in good shape except for the front end of the engine, which will be fixed. Also the blades and veins are coated with corrosion. They will also be cleaned or replaced,” he pointed out.

About the plant’s disadvantages, he said that there were several, such as its being a single-fuel plant running on gas when Pakistan was short of gas. “So although the engine is not the most efficient one out there, it is good enough for now,” he said.