LAHORE: The Private Power and Infrastructure Board (PPIB) on Monday encashed $2.6 million performance guarantee of 135MW Star Power Limited for failing to put up the plant despite 10 years’ delay.

According to PPIB officials, Minister for Water and Power Khawaja Asif, who also chairs the board, had ordered the encashment last week, but the Star Power management went to the court and got stay order.

On Monday morning, the stay was vacated and the PPIB encashed $2.6 million performance guarantee within next one hour.

The Star Power was given licence under 2002 Energy Policy and awarded Letter of Intent (LoI) in 2004. Out of 13 projects given permission, 12 came online latest by 2010, but the Star Power failed to put up the plant at Dharki (Sindh).

The original investor later sold the project to a local investor, who promised to set up the plant within next one year and applied for the extension of LoI period, which was given.

In 2009, Pakistan Electric Power Company (Pepco) moved a case for cancellation of the project and requested the government to divert its gas allocation (around 35m cubic feet per day) to the Guddu Power Station. However, it was turned down, and the management was given extension.

The project further got three extensions, but failed to put up the plant; last one was given by the former minister for Water and Power, Syed Naveed Qamar, in 2011.

According to the PPIB, the IPP had asked for another extension and the Sindh government was supporting the request.

The provincial government also assured the Ministry of Water and Power and the PPIB that the Star Power would establish the plant if it is granted extension. But both the ministry and the board refused the fourth extension, because 10 years had already elapsed and ordered the confiscation of the performance guarantee that happened on Monday morning.