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Chinese firm blamed for Nandipur delay

Updated December 31, 2017


LAHORE: Various issues between the Northern Power Generation Company Limited (NPGCL) and a Chinese company have delayed commencement of operation and maintenance (O&M) of the 425-megawatt combined cycle Nandipur Power Plant.

In February, the government had entered into a 10-year contract with China’s Hydro Electric Power System Engineering Company (HEPSEC) for operation and maintenance of the Nandipur project.

According to documents, both companies continued to write letters to each other over various issues before commencement of the O&M services. But, a senior official of the energy ministry (power division) dispelled the impression. “They (the Chinese company) have been mobilised to the site for O&M services,” Zafar Abbas, the power division’s joint secretary (transmission) who also heads the National Transmission and Despatch Company Limited, told Dawn when asked about delay in the commencement of project’s O&M services.

Correspondence between the two companies reveals that various tasks pending either on the part of the Chinese company or NPGCL have delayed execution of the agreement.

“The NPGCL appreciates the M/s HEPSEC, the operator’s urge for the commencement of O&M services at Nandipur power plant… However, the hurdle in materialising the same is sheer failure of the operator in completion of its prerequisite contractual obligations. Regret to quote that M/s HEPSEC has not so far completed the mobilisation services despite the lapse of significant time. The critical most among them is the initial performance test,” reads a letter written by the NPGCL’s project director to the HEPSEC’s deputy general manager on Oct 13.

According to the letter, pending items on the part of either company included provision of Chinese company registration by the Pakistan Engineering Council, operator’s insurance policy, performance test procedure, computerised maintenance management system, approvals from local authorities, initial performance tests, updated list of spare parts, owner’s insurance, internal security, initial spare parts and consumables, accommodation and offices and supervisory engineers.

“It is further intimated that the current status of completion of the mobilisation services reveals further delays; hence this office has no option left other than invoking the mobilisation LDs as stipulated in the contract. Nevertheless, the mobilisation advance payment guarantee, expiring on Oct 21, necessitates further extension due to the aforementioned discrepancies,” the letter states.

In another letter dated Dec 18, the NPGCL complained to the Chinese firm for not providing the complete registration certificate. Through another letter on Dec 23, the NPGCL expressed its anger at the Chinese firm for not initiating the O&M services after it held the NPGCL responsible for delay by attributing various deficiencies to it.

Documents further mention that through some of the correspondence cited as reference, the facts have also been accepted by the HEPSEC in one way or the other, which, the company says, could be proved, if needed.

Meanwhile, HEPSEC has recently submitted the provisional registration certificate and operator’s insurance, indicating lapses on its part. As far as the owner’s insurance is concerned, it being ex-WAPDA entity by default has its own pool for the purpose that covers up the risks. But specifically for the O&M contract, the operator will be apprised accordingly as soon as they earn the commencement.

Gencos Holding Company Limited Chief Executive Officer Muhammad Imran claimed most of the issues causing delay in the O&M services had been resolved.

“We have fixed Jan 6 as a provisional date for getting the O&M services initiated by the Chinese firm,” Mr Imran added.

He said completion of the process to convert the plant to gas was also one of the reasons for delay. “Since the conversion work is over, the Chinese firm would soon be able to carry out tests related to O&M at the gas-fired plant,” he added.

Published in Dawn, December 31st, 2017