The Nandipur Power Project | Report on Nandipur Power Project

The Nandipur Power Project | Report on Nandipur Power Project

Summary

Nandipur Power Project is a 425 MW (with potential of 1,000 MW) combined cycle thermal power plant situated at Nandipur near Gujranwala in the Punjab province of Pakistan. Being constructed by the China Dongfang Electric Corporation, the project was completed in March 2015. The estimated cost of the project was Rs. 23 billion ($574 million) when it was announced, which according to the Government (PMLN), escalated to Rs. 57.38 billion due to delay and negligence of the previous (PPP) Government. However it is claimed by some that the actual cost reached up to Rs. 84 billion.

Shahbaz Sharif wrote in a national newspaper about the project: “In the middle of the 2010, a major chunk of the project was almost complete and it seemed as if the project would be over on time as we believed there would not be any monetary issues but we were disappointed.”

Reports Attached:

Practical Steps: Nandipur Power Project kicks off

Commission report on Nandipur confined to archives

Introduction:

Electricity in Pakistan is generated, transmitted, distributed, and retail supplied by two vertically integrated public sector utilities: Water and Power Development Authority (WAPDA) for all of Pakistan (except Karachi), and the Karachi Electric (K-Electric) for the city of Karachi and its surrounding areas. There are around 20 independent power producers that contribute significantly in electricity generation in Pakistan.

For years, the matter of balancing Pakistan's supply against the demand for electricity has remained a largely unresolved matter. Pakistan faces a significant challenge in revamping its network responsible for the supply of electricity. Pakistan's electricity producers are now seeking a parity in returns for both domestic and foreign investors which indicates it to be one of the key unresolved issues in overseeing a surge in electricity generation when the country faces growing shortages.

History of Wapda Power:

At the time of independence, Pakistan inherited 60MW of power generation capability for a population of 31.5 million, yielding 4.5 units per capita consumption. Twelve years later, when WAPDA was created in 1959, the generation capacity had increased to 119 MW. By that time country had entered the phase of development, which required a dependable and sold infrastructure, electricity being its most significant part. The task of power developement was undertaken by WAPDA for executing a number of hydel and thermal generation projects, a matching transmission network and a distribution system, which could sustain the load of rapidly increasing demand of electricity.

The effects of WAPDA's professional approach to find the solution to multifarious problems did not take long to show. After first five years of its operation by 1964-65, the electricity generation capability rose to 636 MW from 119 in 1959, and power generation to about 2,500 MKWH from 781 MKWH. Number of consumers in 1959 to 688 thousand in 1965. As many as 609 villages had electricity supplied to them by 1959, increasing to 1882 in 1965. The rapid progress witnessed a new life to the social, technical and economic structures of the country, mechanized agriculture started, industrialization picked up and general living standards improved.

The task of accelerating the pace of power development picked up speed and by 1970, in another five years the generating capability rose from 636 MW to 1331 MW with installation of a number of thermal and hydel power units. In the year 1980 the system capacity touched 3000 MW which rapidly rose to over 7000 MW in 1990-91. Now the total generation capacity from WAPDA's own hydel and thermal sources after completion of Chashma Hydro Power Plant plus generation from independent power procedures stands at 15764 MW.

Practical Steps: Nandipur Power Project kicks off

A cute energy shortage has been the biggest hurdle in economic progress of the country for a couple of decades. Every government in its tenure made efforts to get rid of power outages but nothing worked out. In fact, the crisis turned severe in the five-year tenure of the previous government as the people took to the streets to protest against prolonged outages. The offices of the PEPCO were also attacked many times.

According to a press release, unfortunately, the previous government did not make sincere efforts, which were urgently needed, to deal with the crisis. It a pity that the officials associated with the power energy projects, were involved in corruption scandals, which discouraged public greatly.The Punjab government in the five-year term of the PPP government tried to deal with the issue but failed at every stage due to problems created by the central government, for instance, Nandipur Power Project.Shahbaz Sharif wrote in a national newspaper about the project: “In the middle of the 2010, a major chunk of the project was almost complete and it seemed as if the project would be over on time as we believed there would not be any monetary issues but we were disappointed.”

Commission report on Nandipur confined to archives:

ISLAMABAD: The present faux pas on the Nandipur power project apart, a report prepared by a Supreme Court appointed commission that had found a loss of Rs113 billion to the national exchequer and the negligent elements responsible for this whopping damage in this project, has been consigned to the national archives to rust, unlikely to be retrieved for implementation.

The findings formulated by the Justice (retd) RehmatHussainJafferi commission before the present government came in place had held that the public kitty was deprived of Rs113 billion due to the negligence of the law ministry of the Pakistan People’s Party (PPP) government that caused inordinate delay in giving necessary approval to the Nandipurproject. The commission had been nominated by an apex court bench presided over by the then Chief Justice Iftikhar Muhammad Chaudhry on a petition filed by Khawaja M Asif, currently the Water & Power Minister, who was then in the opposition. He had sought punishment for those responsible for the criminal delay.There has been no action whatsoever by any anti-corruption agency on the 94-page report. The current government never showed any penchant for any proceedings in this case. As a result, the findings are lying unattended. Punjab Chief Minister Shahbaz Sharif has now invited the National Accountability Bureau (NAB) to look into any kind of corruption in the Nandipur project by his government, and has offered himself for accountability.

The Jafferi commission had ruled that there was negligence on the part of the executive authorities of the federal law ministry, which delayed the completion of the projects.It said that an approximate loss of more than Rs1l3 billion was caused to the national exchequer and the law ministry is responsible for causing delay in completion of the documents.According to the report, the law ministry had not cleared the issuance of sovereign guarantee of the finance ministry to the contractor, leading to the termination of work. Originally, the Nandipur project was forecasted to be completed by April 2011.Babar Awan was the law minister and Justice (retd) RiazKayani, who is now a member of the Election Commission of Pakistan, was the law secretary when the delay occurred.It was stated in the report, filed in the Supreme Court, that the sovereign guarantee was not vetted by the law ministry for years, which forced the Chinese firm to cancel the contract.Immediately after assuming office, the Nawaz Sharif government had started taking measures to kick-start work on the project.

On completion, Nandipur power project (originally costing $329 million) was to add to the national grid 425 MW. It was also pointed out that during a meeting of Chief Minister Shahbaz Sharif with a Turkish delegation at the time one of the delegates had drawn his attention towards the inordinate delay in the execution of Nandipur power project.

Shahbaz Sharif had then asked his chief secretary to take up the matter with the concerned federal ministries of the PPP government. The chief secretary had written a letter that said energy crisis was one of the biggest challenges Pakistan has been facing for decades, and it is getting acute every day, thereby causing a scorching impact on economy, industry, agriculture and almost every sphere of life, which has slowed down the economic growth.The apex court had also then questioned the federal finance secretary regarding the non-issuance of sovereign guarantee. However, the court had been informed that several letters had been written to the law and finance ministries for issuance of sovereign guarantee to clear the machinery from the port but in vain.

September 11, 2015

Conclusions:

The focus of an audit report has to be the over-expenditure of a massive $518 million. How did the government end up spending an additional $518 million on a project that was originally estimated to cost a total of $329 million? Just imagine: over the past eight years $518,000,000 of Pakistani taxpayers’ money has evaporated in thin air and an audit report authored by the auditor general of Pakistan (AGP) is now talking about “inflation and exchange rate fluctuations”. The cost has gone up from $329 million to $847 million and that has absolutely nothing to do with ‘exchange rate fluctuations’.

Congratulations, the Nandipur Power Project is “producing 425MW of electricity”, claims the minister of water and power. On May 20, 2014 the chief executive officer of the Northern Power Generation Company, the company that owns the Nandipur Power Project, filed a petition with the National Electric Power Regulatory Authority (Nepra) claiming that the generation cost stands at Rs18.17 per kWh while Nepra has allowed a tariff of Rs11.30 per kWh. For the record, the Nandipur Power Project may indeed be producing 425MW of electricity but the government would have to provide a subsidy of Rs2.5 billion per month every month of the year for a total of Rs30 billion a year. Or alternatively, the circular debt is bound to go up by a wholesome Rs30 billion a year. On May 21, 2013 the Public Procurement Regulatory Authority (PPRA) blacklisted Dongfang Electric by posting a warning for all “other companies not to carry out business with Dongfang Electric Corporation.” How much is $518 million? Well, Balochistan’s annual education budget for its 13 million residents is $385 million. And Khyber Pakhtunkhwa’s annual health budget for its 28 million residents is $300 million.

December 12, 2015

Recommendations:

We should increase the numbers of power plants.

We should increases the electricity capacity of power plants for the progress of our country.

We should made new power plants like KotAddu Power Company Limited & Bin Qasim Power Plant I also increases the numbers of small power plants.

We should buildup the hydro-power units to increases the cheap electrical generation because it is need for our country.