THE highly controversial rental power plants have once again made the headlines in print media. First, the trumpeted Turkish power plant of 249-mw gross capacity, inaugurated almost seven months ago, has not yet commenced its commercial operation.
Second, the 2010-11 report of the Auditor General of Pakistan points out an embezzlement of Rs60 billion in the RPPs contracts along with a number of irregularities. Third, in spite of contract of all the 14 RPPs over the last almost three years, having cumulative gross capacity of 2,184 mw, the massive electricity loadshedding continues unabated.
Apparently in a bid to overcome electricity loadshedding, the government had decided to obtain power on rental basis. Currently, eight RPPs are, or were till recently, in advanced stages of implementation. Four RPPs contracted directly by PEPCO are Techno E-Power-I (Faisalabad), Techno E-Power-II (Sahuwala, Sialkot), Young Gen (Faisalabad) and PPR/Walters Power (Guddu). Other four projects contracted by PEPCO, or its generating companies, through the Private Power and Infrastructure Board include Karkey Karadeniz Electric (Karachi), Reshma Power (Lahore), Gulf Rental (Gujranwala) and PPR/Walters Power (Naudero-I).
However, none of the eight projects could achieve the Commercial Operations Date (COD) as per contracts, and a few that have been commissioned are not operating at full capacity. As on June 25, 2011, hardly a hundred of megawatts power has been added to the national grid through these RPPs. Current demand of electricity outstrips supply by about 5,000 mw, resulting in 10 to 20 hours loadshedding on a daily basis, which has crippled civil life, trade and industry. Given the conditions of circular debt, improper planning and lack of governance, power shortages and outages would continue until 2015, if not for a still longer period.
Karkey Karadeniz Electric, said to be the largest barge-mounted power plant in the world, has been contracted at $564.64 million for a period of five years. It has been labeled as most expensive power plant by the Asian Development Bank (ADB) in its evaluation report. Contract was signed in September 2008 but made effective on advance payment of 14 per cent in May 2009. The RFO-based power plant was scheduled to achieve COD within six months i.e. by November 2009. The sponsor missed the deadline and COD was extended to May 2010, further revised on September 30, 2010 for the same reason.
“Kaya Bey”, one of its two units, arrived in Karachi on November 18, 2010 and was inaugurated after 12 days. The COD was extended, once again, to December 2010, but the project missed deadline. The second unit, “Alican Bey”, reached in January 2011. After completion of test and trial runs on January 29, the plant ran into snags, due to technical and interconnection problems. At present, the plant supplies only 10 mw to national grid, and has not achieved the COD. Only recently, the Turkish company has acquired an oil tanker to provide furnace oil to power generating units.
The first RPP contract of the series is Techno E-Power-I at Sumandri Road, Faisalabad with a capacity of 150 mw. The RFO-based single cycle power plant, which was contracted for two years, was to achieve COD on May 15, 2008. Special favour was granted to the sponsor as eligibility criteria announced in press advertisement of October 10, 2007 was revised to their advantage, deleting required experience of providing similar rental power for minimum of three locations. As the project failed to meet deadline, COD was extended to July 2009. It was partially energised in August 2010 and generated 60 mw for a few months.
It could not meet requirements of performance of heat rate test at commissioning stage and the plant was shut down. Status of the other Techno E-Power RPP at Sahuwala, Sialkot of 150 mw net capacity is not any better either. It has been shutdown for months now. The RPP failed to meet contracted capacity. The initially agreed COD was November 2009. Likewise, Young Gen of 220 mw gross capacity, located at Satiana Road, Faisalabad, is also not operatng. Favours were extended to the sponsor as qualification criterion of “the company having a turnover of Rs200 million during the last three years” was instead changed to “having $20 million net worth of the company”.
Young Gen was incorporated in March 2008 when proposals were invited by the Pepco and therefore it did not meet the originally prescribed criterion. Reshma Power, located at Manga-Raiwind Road, Lahore, has a gross capacity of 220 mw. Contract was signed in April 2009. Rental Services Agreement was concluded in September 2009 and seven per cent mobilisation advance paid, which was later increased to 14 per cent that amounted to $55.26 million. It was to achieve COD on December 30, 2009, later extended to November 30, 2010. The plant was inaugurated by the then federal minister for water and power in January this year when only one machine, out of four of 50 mw each, was on test run.
The RPP still remains off-line. Gulf Rental at Aimanabad, Gujranwala of 81 mw gross capacity is the only RPP on-line. Though it too could not achieve original COD of December 2009, the plant was commissioned on April 29, 2010. President Asif Zardari inaugurated RPP Naudero-I of 51 mw capacity in April 2010. A gas-based power plant, contracted at $91.70 million, Naudero-I generated electricity during June-August 2010, but was shut down in September. Currently, it generates maximum of 30 mw electricity, that is, if gas is made available. PPR/Walters International’s other gas-based project at Guddu of 110 mw capacity, which was effective since January 2010, has recently been signed-off.
Out of the remaining six RPPs, Ruba Energy at Batapur, Lahore, (170 mw gross), Techno E-Power-III Sialkot Rental (85 mw) and Tapal’ RPP at Kamoke, Gujranwala (70 mw) are being implemented though delayed. Independent Power at Gojra, Faisalabad (221 mw) and PPR/Walters at Korangi, Karachi (205 mw) have not been signed, whereas PPR’s Piranghaib, Multan (192 mw) has been cancelled. In all 19 RPPs were in pipeline.
Another two RPPs, Walters’ Naudero-II (50 mw) and Premier Energy at Lahore (64 mw) are not coming up, for one reason or the other, while the other three have not been signed. Reportedly, all the 19 RPPs are cost- and fuel- intensive, inefficient and obsolete. Initiation of RPPs as major strategic tool to end loadshedding in short term has proved to be a futile exercise, in terms of availability, reliability and affordability of electricity. The government should cancel all the non-performing RPP contracts with immediate effect and concentrate on optimal utilisation of power generation capacities of the IPPs and PEPCO, which can add about 2,000 mw immediately, as suggested by the ADB in its report. At the same time, the government needs to aggressively pursue timely completion of the ongoing projects, both in public and the private sector.