On April 16, a local engineering company was awarded the EPC (engineering, procurement and construction) contract — the first-ever to a Pakistani company — of an IPP (independent power producer) thermal power plant.

The 225-MW capacity gas- and oil-based dual-fired power plant is being constructed at Bhikki in Punjab. The local company will be responsible for engineering, procurement and construction activities related to the project, which has been sponsored by an overseas investor based in the UK. The initiative taken by the investor will go a long way in promoting domestic engineering industry in power sector. This will result in achieving self-reliance, technology transfer and import substitution in this field.

At a same time, local investors are not even prepared to procure indigenous machinery for power plant projects. Almost a dozen thermal power projects of varied capacity have achieved financial close recently for which all the EPC contracts have been finalised by the Pakistani sponsors with foreign companies.

Local industry is ignored to the extent that not a single item of machinery is being procured locally for these projects, in spite of existing capacity, capability and references for the same. These leading businessmen have even obtained duty concessions and exemptions to import the machinery items that otherwise are being produced locally as notified by the Federal Board of Revenue.

The Economic Coordination Committee (ECC) of the Cabinet has allowed on April 13 these IPPs to import heat-recovery steam generators (boilers), feed water pumps and cooling towers etc at five per cent custom duty. Otherwise, as per rules and regulations in vogue, 20 per cent statutory duty is applicable on import of these items that are manufactured locally, of comparable quality and at lower price.

Hussain Siddiqui, Islamabad