All-risk insurance of Guddu plant: Genco-II board seeks PD’s permission

ISLAMABAD: The Board of Directors (BoD) of Central Power Generation Company (Genco-II) has sought permission from the Power Division to obtain all-risk insurance of Guddu Combined Cycle Power Plant (CCP) from the market through competitive bidding as NICL has failed to fulfill performance benchmarks.

According to Chairman of the Board, Syed TahirNawazish, as per the Power Division’s directions, the report was placed before the Board of Directors, CPGCL in its 150th meeting held on December 13, 2022.

According to him, the Board noted that since the CPGCL is a federal government-owned entity, it can only get risk insurance from M/s NICL, as per the Section 166(2) of the Insurance Ordinance, 2000. The Board also noted that since 2014, the CPGCL’s management has made numerous efforts, and vigorously pursued the matter to get the insurance for 747MW CCPP, however, both the NICL and the PRCL failed to provide, or procure the requisite insurance coverage on CPGCL behalf.

The CPGCL management, from time-to-time, conveyed its concerns and reminders to the NICL and the PRCL through various letters/emails in which, both entities were clearly informed of the sensitivity of issue and possibility of loss to the national exchequer due to non-availability of all risk insurance, however, the needful was not done at their end, despite a number of tenders being floated for this purpose.

Future CEOs of GHCL, Genco I, II: Three names finalised

The matter was also placed before the CPGCL’s Board on a number of occasions over the past eight years, and numerous directions were issued by the Board to expedite the matter, however, unfortunately, the NICL and PRCL have remained indifferent to the risk and have failed to perform their statutory duty in this regard, which has unfortunately resulted in significant loss.

The Board also noted that the Inquiry Committee has also categorically found

The NICL to be negligent in this regard, finding that “it is also noteworthy that in June 2022, the CPGCL approached the Power Division with a request to give its policy position on operating the 747MW CCPP, Guddu without insurance cover.”

In response, the Power Division, in its letter of September 14, 2022 directed the CPGCL to take-up operational and technical decisions at the company’s level and further conveyed to refer those issues which need policy input from the ministry: “ In spite of the monopoly being enjoyed by M/is NICL for providing insurance to government organizations, they failed to come up with the required solution and engaged in lengthy correspondence with CPGCL spanning over 8 years and the situation is still unresolved leaving the national assets without any insurance cover.

During this period twice the incidents occurred on the plant resulting in loss of billions of rupees to national exchequer, but, the management of the CPGCL and M/s NICL could not work out a solution. The Inquiry Committee is of the considered opinion that the role of M/s NICL needs to be comprehensively reviewed by authorities concerned, by clearly delineating the performance benchmarks for the NICL so that it is held accountable against these benchmarks on regular basis in future.“

The Board also noted that the inquiry committee’s finding that it was the “prime responsibility” of all the CEOs of CPGCL since 2014, as well as GHCL’s management to operate the 747MW CCPP only after obtaining necessary insurance cover to mitigate all risks as per international best practices.

In view of this finding, the CPGCL management has informed the Board of its inability to further operate the 747MW CCPP, Guddu until such time that adequate insurance cover is in place. In light of the foregoing, the CPGCL’s Board maintains that it is constrained to seek the Power Division’s policy directive on further operation of the 747MW CCPP, Guddu without insurance cover.

Copyright Business Recorder, 2022