Local firms vying for O&M business

Updated February 20, 2020

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Largely dominated by foreign companies so far, potential annual revenues of the O&M sector amount to $400 million. — Dawn/File
Largely dominated by foreign companies so far, potential annual revenues of the O&M sector amount to $400 million. — Dawn/File

KARACHI: Pakistani companies are aiming for a bigger chunk of revenues emanating from the operations and maintenance (O&M) segment of the country’s growing power sector.

Largely dominated by foreign companies so far, potential annual revenues of the O&M sector amount to $400 million, according to Tahir Jawaid, CEO of Hub Power Services, a Hubco subsidiary.

Speaking at a press briefing, he said the four recently installed coal power plants — Sahiwal (1,320MW), China Power Hub (1,320MW), Port Qasim (1,320MW) and Engro Powergen (660MW) — have already created annual O&M revenues of $160m.

Worldwide, power plants are usually set up by consortiums that are dominated by financial institutions and investors since the expected returns are as secure as those on long-term bonds. To make such projects bankable, lenders require power producers to entrust O&M to technically sound, purpose-made companies.

Only a handful of Pakistani companies operate in this segment, with none of them being active across the spectrum of thermal, hydro and renewable power plants. This is despite the fact the country’s installed capacity has risen 45 per cent to 33,836MW from 23,337MW in 2015.

New power plants of 3,930MW are expected to become functional by 2023. They will create O&M revenues of approximately $150m, Mr Jawaid said.

The parent company of Hub Power Services stepped into this segment five years ago. “It was not a price issue when we picked up O&M (of Hubco’s various plants). The issue was the amount of care they (foreign companies) were taking of the plants. They had ruined all our boilers,” he said.

The company is currently operating the Hub base plant (1,202MW) along with Narowal (225MW) and Laraib (84MW) plants. It will soon start providing O&M services to upcoming Thar coal-based power projects of Thar Energy (330MW) and ThalNova Power (330MW).

According to the latest annual report, Hubco paid a fee of Rs1.6 billion to its subsidiary for O&M services in 2018-19.

Published in Dawn, February 20th, 2020