Calling it a fiasco wont be wrong. Delays, mismanagement, corruption allegations, and sky rocketing costs; Nandipur Power Projects journey has been nothing but a headache from the very beginning.
A quick recap is warranted. The project was first conceptualised in 2008 when Pakistan Electric Power Company (PEPCO) signed a Rs23 billion contract with Dongfang Electric Corporation of China to construct the Nandipur Power Project a 425 MW combined cycle thermal power plant situated near Gujranwala. However, the machinery worth $85 million remained stuck at the Karachi Port for over two years that resulted in the Chinese firm terminating the contract in 2012 on account of massive losses. Later when the current government took office in 2013, the Ministry of Water and Power renegotiated the contract with Dongfang Electric Corporation to resume work on the Nandipur Power Project.
After a delay of over five years, the Prime Minister inaugurated the first turbine of the project in March 2014, which remained operational only for five days before shutting down due to mismanagement and use of inappropriate fuel.
Its ill-fate didnt end here; while the project has remained close to the governments heart, it has been in the spotlight since forever for all the bad reasons. After delays, a key setback to the project was the sacking of Nandipur Power Company Managing Director Captain (Retired) Muhammad Mehmood over alleged corruption and bad governance after he was bestowed with Sitara-e-Imtiaz!
For corruption, National Accountability Bureau (NAB) initiated an investigation of the project back in 2015 where it completed phase one of the probe that covered the period from approval of the project till its first initiation; the second phase for probing cost overruns, however, was delayed as a suspicious fire gutted the projects record.
Coming to cost escalations, the government and the regulator (NEPRA) have been on the opposite side of the tariff for the Nandipur plant. The government has been in a hurry to pass the cost overrun and inefficiencies through high tariffs to consumers, but Nepra has not been agreeing to it. Nepra has repeatedly turned down requests to increase the total cost of the 425-525MW Nandipur project to Rs65 billion in determining its tariff.
The regulator has been tough on the ministry, but now with direct reporting line of Ministry of Water and Power, there is high chance that top officials would influence Nepra decisions. The initial contract cost was around Rs23 billion, which apparently shot to around Rs58 billion in April 2015 when the present government renegotiated it. However, Nepra has considered project cost of Rs42 billion in a 30-year tariff that averages Rs11.64 per unit. The government has been trying for Rs15.63 per unit a 34 percent increase for cost overruns, delays, penalties etc.
The government has been on the lookout for an operator since then. Dongfang Electric Corporation China had refused to take over the project, and one alleged reason for sacking the Nandipur Power Company MD was him awarding the Operations and Maintenance (O&M)O&M contract to a Malaysian firm. However, just recently, the government has decided to hand over the O&M services of the project to Hydro Electric Power System Engineering Company of China (HEPSEC) for ten years. While the contract price has not been disclosed, the rumour mongers have been highlighting an 80 percent increase in the O&M per unit costs agreed with the lowest bidder. Is Nandipur out of the frying pan into the fire? Fingers crossed!
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