HUBCO's coal in limbo

Lately, the government policies on power projects have been too confusing, and illogical. At one end its trying to shelf half of HUBCO's imported coal based power project where the physical work on the jetty is under process; on the other hand, the government is planning in haste to set up RLNG based new power plant of 1200 MW. Two projects on imported coal by private sector where the feasibility and foreign financing had been arranged, are already down the gutter as government is now supposedly entertaining only projects based on indigenous fuel.

Does it make sense? Does the government have any real policy or its just operating on whims? The issue of setting up of a new RLNG plant, and the delay in other RLNG projects, will be discussed in this section soon. Today's column focuses more on the agony of HUBCO's project, which is also a part of CPEC.

HUBCO's 2X600 MW power plants based on imported coal is under process in partnership with China Power Hub Generation Company (CPHGC). The letter of support was issued based on 2X660MW, and the license of generation has also been issued and tariffs has already been set.
The Chinese contractors have already started working on the jetty to handle coal for two projects with around 500 people, mostly Chinese, on the site. Over $30 million have been spent on feasibility studies, financing arrangements and on site construction of jetty, whereas $18 million have been to GE for machinery.

All the signed documents with government on the project are based on 2X660MW whereas the verbal discussions and intentions of ministry of water and power are to allow 1X660MW project. Have you ever heard this happening at this scale anywhere else in the world?

The industry experts fear that the way project is designed and based on onsite work, the project is only feasible for 2 plants of 660 MW each and it would not make sense for the investors to carry on one plant project. CPHGC, which is 74 percent owned by China Power International Holding (CPIH) is in efforts to resolve the issue with government of Pakistan.

According to HUBCO's letter to PSX the power purchase agreement (PPA) and the implementation agreement (IA) of the project have not yet been executed, which were required to be signed by October 11, 2016 under the terms of letter of support issued by the private power infrastructure board (PPIB).

The share price of HUBCO has nosedived lately as the fate of new project goes in limbo. What is the signal government trying giving to the investors? How can the country attract much needed FDI by running such contradictory policies?

The HUBCO project in partnership with the Chinese is a $2 billion project including the plants and construction of jetty with $50 million already spent on it. And now half of the project is in jeopardy. If the government deals a CPEC project with such an inconsistency, how can any other investor dare to put serious money in the country?

These are tough question government has to be dealt with; and should come with a coherent approach to deal with power crisis; once it decides on a policy, it should stick to it. Chinese may lobby the case of HUBCO in CPEC joint coordination committee soon; and a decision on the fate of the project is likely to be taken one way or the other by November end.