ISLAMABAD, June 21: The ministries of petroleum and water and power have protested against the Sindh government’s unilateral decision to award a huge mining and power generation contract to a local company at Lakhra mines without any public announcement. The contract was worth more than Rs60 billion.
Official sources told Dawn that their main concern was that they had invited international bids for the same project through two very high-profile conferences in Dubai and London early this year. Sindh minister for mines and minerals, Irfanullah Marwat, was part of these two conferences.
The last date for submission of bids from international and local companies was June 30, 2005. Sources said Prime Minister Shaukat Aziz had been informed about the Sindh government’s decision which put the international bidding process of the project in jeopardy.
While bids keep on pouring in from local as well as foreign companies, the Sindh minister for mines and minerals signed an MoU with the Hyderabad-based Fateh Group for mining and a power plant.
The Sindh government also did not take into confidence the Pakistan Mineral Development Corporation (PMDC) and Wapda which had invested over Rs782 million on the development of Lakhra coal mines and possessed a lease of the area.
Official records seen by Dawn suggest that the decision of signing an MoU was taken without completing the quorum of Sindh Coal Authority and its majority members — including a member of the National Assembly, two private members and additional chief secretary development — were absent from the meeting.
Even the additional chief secretary Ghulam Sarwar Khero wrote a dissenting note on the decision which had been taken by the SCA chairman, secretary mines and director general coal. The secretary mines and director general coal are currently working on contract basis.
Mr. Khero said in his report that without a specific feasibility study of the mining lease over this area in compact block, Lakhra should not be granted to Fateh Group, because the feasibility study of the entire area had already been done.
He said that in the absence of four members of the SCA board, the meeting had no legal justification as many crucial decisions were taken in the said meeting.
Originally, Wapda had been asked to set up a 300-mw plant at Lakhra coal mine and a new company Lakhra Coal Development Company (LCDC) had been established with 50 per cent shareholding of PMDC, 25 per cent Wapda and 25 per cent Sindh government.
As such, the LCDC was given six leases over an area of 16,564 acres. But recurring technical problems did not allow Wapda to install a 300-mw plant and hence it was decided that three plants of 50-mw each would be set up through Wapda.
It was also decided that the remaining 150-mw power plants should be developed in the private sector and hence an area of 8,282 acres was given back to the Sindh government to involve the private sector in power generation but with the condition that the private party would reimburse expenditures incurred by the PMDC and return the whole lease area to LCDC in case it failed to set up a power plant.
The area was given to Smith Company of US on the condition that it would not be allowed mining of the area, unless it set up a power plant since the Lakhra Coal Mines are dedicated to power generation.
The lease remained with the US company for seven years, but it did not set up the plant and hence the Private Power and Infrastructure Board cancelled its letter of interest to set up the power plant.
In 2003, the federal government decided to transfer the lease to the PPIB to seek international bidding for the project by December 31, 2004. However, the prime minister decided to extend the bidding date till June 30, 2005, and directed the ministries of petroleum and power to go for its roadshows in Dubai and London, along with other power projects and the Sindh minister for mines and minerals was made part of the official delegation to the two roadshows.
