Behold! The promised days of abundant power supply are about to begin. Oh sorry, bad script, because the magic of rental power plants has disappeared leaving nothing but embarrassed faces in the power ministry who had earlier promised
o load shedding after December.
And it appears things are not going to get any better for the power ministry as the finance mandarins have come out in open criticism against the rental power projects. Finance ministry was not fully convinced with the idea of RPPs first up but the ECC still had the upper hand and gave it a nod to go ahead. But what has now heightened concerns is a sense of disquiet over the project shown by Asian Development Bank.
Earlier, it was the Prime Minister who announced a couple of months ago that rental power contracts would be subject to third party validation by the ADB to ensure transparency in transactions and address the concerns raised by the opposition. But those in the power ministry seem to have completely ignored the directives and continue to act on their whims.
The ADB has reportedly raised concerns that most of the rental power contracts seem heavily tilted towards private investors. The regional lender says the RPP project ignores the interests of both the government and consumers, and may not meet the international economic standards of fairness. This is what caused the finance ministry to request the power ministry to put the progress on hold until the ADB audits the project.
Clearly, the progress of rental power projects is far from satisfactory. Out of the 1500 MW initially planned through RPPs, the government has succeeded in arranging less than one-third - 490 MW to be exact - of the capacity so far, including those due to be commissioned by December end. What is of vital significance is the fact that these three rental plants promise as much as 37 percent efficiency levels, which would add no more than a mere 167MW to the system.
Likewise, other RPPs who have been awarded the contract have a capacity of 495MW but the low efficiency level is likely to restrict their power generation to just 169 mega watts. Bear in mind that none of these four projects are due to commence operation in 2009, which explains the confession on the part of Power Minster Raja Pervez Ashraf.
PPIBs list of RPPs reveals that none of the plants due to commence in 2010 have been paid the mobilization advance as yet, which strengthens the fear of operational delays. This largely reflects the finance ministrys reluctance to grant the controversial mobilization advance as Transparency International Pakistan has issued reports citing unfair practices regarding the advance. This could result in a probe by ADB when they eventually audit the contracts of RPPs.
Moreover, the finance ministry is not too keen on arranging the financing mechanism of $3.15 billion for the 2250 MW approved RPPs either - a move which could jeopardize Raja Pervezs future plans. Not surprisingly, its the heavy criticism against the RPPs that has threatened their very future, and making lenders reluctant to finance such a heavy sum of money.
It is another story altogether that PPIB sees only 216MW electricity shortage in the country without incorporating the RPPs by the start of 2010. But, this is in complete contrast to the ministrys quoted number of 3200MW even in the winter season. Whether the huge difference is a mean to save the falling grace or some sort of alleged favouritism to the RPPs is anybodys guess. But, what was once termed as the only-way-out of the problem is likely to create more rather than solving it.