The project financed by NBP and ABL was scheduled to COD by March 31, 2009. The project company gave the revised COD as of October 2009, but further delayed it up to December 18, 2009. The Prime Minister while inaugurating the project on August 15, 2009, had stated that the excellent track record of Atlas Group in different business endeavours in Pakistan, participation of German companies in Atlas Power and other multinational companies in various IPP projects is sufficient proof that international investors are not shy of investing in Pakistan and are showing renewed trust in the government policies.
Atlas power project Managing Director Fayyaz Elahi recently briefed the PPIB Board that: "Although the 225 MW oil-based power project has not yet achieved COD due to some technical problems in the plant, it has been delivering electricity to the national grid and is providing valuable support to the system and helping in reducing loadshedding."
The PPIB Managing Director was of the view that during the construction phase, the project company issued several notices of force majeure events and claimed extension in COD and now the management is seeking the Board decision. He said during a meeting with President Asif Ali Zardari on July 23, 2009, Atlas Power as well as other sponsors of fast track projects made a request for the government support in overcoming financial difficulties especially in relation to non-encashment of the project guarantee due to delays in achievement of target COD.
Upon a query, the Board was informed that encashment of PG of $5000/MW is in addition to hefty penalty for the delay in RCOD under the Power Purchase Agreement (PPA). This additional penalty is only applicable for fast track projects to be commissioned by December 2010. The board deliberated the issue in detail and endorsed the PPIB position of rejecting the force majeure notices.
However, it agreed to facilitate fast track IPPs, since the government has decided to reduce their financial difficulties due to encashment of over $1.1 million guarantee for each project, and the fact that penalty for delayed RCOD under the PPA was quite adequate. The Board decided to recommend to the ECC waiver of additional penalty of guarantee encashment of $5000/MW for fast track projects.
The PPIB Managing Director informed the Board that in October 2006, the ECC had approved a target of 2225 MW fast track power projects for which the commissioning date was subsequently extended by the ECC till end December 2010. So far, 10 projects with a capacity of about 2100 MW have been approved by the Board, however, some of the projects, referred to Nepra for tariff approval by the PPIB have been delayed due to the long tariff approval and review process.
The sponsors of these projects are still interested in putting up the power plants. However, it is not practically possible to achieve the commissioning deadline of December 2010, it was pointed out. After deliberations, the Board decided that the matter may be placed before the ECC for approval to waive additional penalty and extend the deadline for commissioning of fast track projects till end June 2012 for projects which have so far not obtained LOS from the PPIB. The Atlas power plant is built by MAN (Germany). It is a turnkey diesel power plant with combined heat and power systems.