6,600MW Gadani power project put on back burner

Updated 04 Feb 2015



ISLAMABAD: The government said on Tuesday that Prime Minister Nawaz Sharif’s signature mega power project – 6,600MW coal-based Gadani Power Park Project – for ending loadshedding had been put on the back burner because of changing priorities of the Chinese government.

In a testimony before the National Assembly’s standing committee on planning and development, top officers of the power ministry and Pakistan Power Park Management Company (PPMC), which has been set up to specifically undertake and facilitate the Gadani mega project, said a decision had also “been taken that all work relating to PPMC may be handed over to the Private Power and Infrastructure Board for rationalisation of the project”.

Also read: Gadani power project: challenges

The parliamentary panel was informed that the PPMC was set up in 2013 for construction of infrastructure like port facilities, coal handling, roads, jetty, etc, to enable setting up of 10 power projects of 660MW each and a transmission line for evacuation of its power. The cost of the entire project was estimated at $6-8 billion.

The committee was told that memorandums of understanding were also signed with China under China-Pakistan Economic Corridor Project for 10 Gadani Power Projects, but later Beijing scaled down its priority over financial and technical apprehensions. For example, the Chinese had concerns over payment issues against electricity sales after the completion of projects and suggested AC, instead of DC, circuit transmission line.

The parliamentary panel was informed Pakistan had even agreed to set up a revolving fund to facilitate direct payments to power producers against electricity sales and was ready to set up AC circuit transmission line, but China reduced the number of projects to four from 10.

As a consequence, Pakistan had to redesign the entire project because transmission line and port facilities also needed to be in consonance with 2,600MW, instead of 6,600MW, but the Chinese side reduced Gwadar Power Park on its priority order.

The committee was also told that a subsequent meeting of China-Pakistan Economic Corridor Project expert group decided to downgrade the 660x4 coal power projects at Gwadar from ‘Early Harvest Projects’ to ‘Actively Promoted List’. The meeting was informed that 14 projects on the early harvest project list were now being pursued for completion by 2018, while the remaining seven projects, including Gadani, would be considered for priority implementation depending on progress achieved on the ground.

The committee wanted to know how the Gadani projects were publicised on national media and why the prime minister decided to inaugurate and lay their foundation stone before completion of studies.

An official of the water and power ministry said the ministry could not respond on behalf of the prime minister or the government because the project was part of the PML-N government’s plans to end loadshedding.

Responding to various questions, water and power additional secretary Omar Rasool confirmed that the project had been put on the back burner, but said it had not been shelved.

The committee was also informed that the Nandipur power project would now be able to contribute 425MW electricity to the system before the coming summer. Previous deadlines of early this year could not be met.

The government had received expressions of interest from only six companies for 10 projects of 660MW each despite repeated extension in deadlines.

The government had created the Gadani Power Park Management Company early last year as a special purpose vehicle for the management of 6,600MW power projects and to provide infrastructure facilities at the site to facilitate international investors, mostly from China.

The 10 projects were first advertised in July last year seeking expressions of interest by Aug 18. Attributing the poor response from investors to sit-in protests in the federal capital, the government extended the deadline to Sept 29, but the response failed to pick up.

The deadline was further extended to Oct 31. The government had earlier registered foreign companies for setting up all 10 projects at Gadani through negotiated memoranda of understanding. The firms had deposited earnest money in foreign exchange, but the government decided to invite bids to meet procurement rules to avoid controversies for awarding contracts through negotiations.

Therefore, it asked the registered firms to send their expressions of interest, telling them their previous earnest money would be returned or adjusted.

Published in Dawn, February 4th, 2015

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