Sonda-Jherruk coal mine/power project: Chinese company to approach Zardari during his visit

Chinese company, China National Machinery Import and Export Corporation (CMC), which is working on Sonda-Jherruck coal mine and power project, is reportedly planning to approach President Asif Ali Zardari during his visit to China to seek more time for finalisation of investment proposal, well-informed sources in Board of Investment (BoI) told Business Recorder.
Recently, CMC representative visited BoI and provided some documents, which they have submitted to Sindh government. However, the company which has already spent millions of dollars on the project, is of the view that it would not be able to submit a formal proposal because their higher management has yet to approve any investment proposal in Sonda-Jherruk and its approval is contingent upon completion of feasibility study which is still incomplete due ongoing load flow studies on the power side and hydrological studies on mining side, the sources added.
According to official documents, BOI organised Pakistan Business Forum in Shanghai on December 17, 2004, during which CMC expressed their interest in developing one million ton production capacity of coal mine and 250MW power plant at Sonda-Jherruk.
In this regard CMC's Pakistani representatives, M/s Tasaq International (Pvt) Ltd, informed PPIB on March 7, 2005 that MoU with Sindh government would be signed in March 2005 and thereafter the feasibility study would be completed within 9 months.
CMC sent a questionnaire to PPIB soliciting clarification on several issues. PPIB contacted all the stakeholders and consequently the CMC was provided all the necessary information. PPIB also provided draft standardised Implementation Agreement (IA) and Power Purchase Agreement (PPA) on June 28, 2006.
Thereafter, CMC on April 6, 2007 expressed interest in developing a 2x135MW plant at Sonda-Jherruk on fast track and expressed its intent to submit technical and financial proposal along with detailed feasibility study. However, CMC did not submit a serious proposal although CMC's team visited many times and made promises to submit them soon.
The sources said after aggressive follow up by PPIB at the start of 2008 CMC delegation held a meeting with the Secretary Water Power on February 25 2008 wherein it submitted a draft informal proposal for a 405 MW integrated coal mining and power project and promised to submit a formal proposal afterwards. The firm, however, did not submit the formal proposal thereafter despite their commitment to do so.
Ever since the submission of the informal proposal, PPIB repeatedly requested CMC, to submit the feasibility study which CMC claimed to have completed. In a meeting with CMC delegation on March 31, 2008 it was agreed that the company would share with PPIB within one week, the bankable feasibility study of the coal mining portion along with the time schedule/milestones for the coal mine development. But it has not yet submitted this document to PPIB.
PPIB on May 12, 2008 requested CMC to send all the pertinent information and justification related to CMC's project along with all timelines on major activities by May 25, 2008, failing which, PPIB will not entertain any correspondence from CMC and will request Sindh government to cancel all understandings and legal relationships with CMC so that some serious investors may be engaged.
In response to the letter CMC responded on May 28, 2008 stating that it would take another 4 to 6 months ie by September to November 2008 to complete their feasibility study. On July 28, 2008 a delegation of CMC met PPIB and reiterated its stance that they are very serious to do this project and work on feasibility study is in progress, however, some more time will be required to complete the study.
The same stance was repeated by CMC before Pakistan's Commercial Consul General, Beijing, in a meeting with him. The firm has yet to submit that formal proposal to PPIB. On September 6, 2008, a meeting was held with the Deputy Chairman Planning Commission to discuss problems raised by Chinese companies. In that meeting, this project was also discussed and PPIB was advised to give a final deadline to CMC and look for other firms in case CMC does not submit the feasibility study within the given deadline.
CMC has never submitted a formal proposal to PPIB and PPIB has not issued any Letter of Interest (LoI) to CMC for conducting the feasibility study for power project. Sources said Mines and Mineral Department Sindh is the only interacting interface at this point of time with CMC and CMC has been pursuing this matter since March 2005 under an MoU/mining license/coal lease with the Sindh government.