Cabinet Division responsible for recording and circulating the minutes of cabinet meetings ignored this recommendation; however, now the Cabinet Division has issued a corrigendum to include the audit of Nandipur Power Project. Managing Director of the project claims that the plant is contributing 90 MW to the national grid. However, Member National Electric Power Regulatory Authority (Nepra) Khawaja Naeem, a close relative of Minister for Water and Power, recently informed a parliamentary panel that Nandipur project has not been given a tariff which is why it cannot sell electricity to CPPA.
In January 2008, Pakistan Electric Power Company (Pepco) signed a Rs 23 billion contract with a Chinese firm, Dongfang Electric Corporation (DEC), for the construction of the project. The project was scheduled to be completed in 2011 but the Law Ministry at the time led by Babar Awan put the project file on ice. Resultantly, project machinery estimated at $85 million could not be released from the port. In 2012, the Chinese firm scrapped the contract and demanded $40 million as compensation from Pepco.
The project cost was revised upward to Rs 57.38 billion and at present it has escalated further to Rs 85 billion ($847 million) which is more than three times the original estimate. Well-informed sources told Business Recorder that Pepco paid Rs 6-7 billion to Bank BNP Paribas - a French bank - as insurance money for the Chinese loan. However, the project neither received the loan nor the insurance amount.
The sources also claim that the government wasted $25 million to convert the plant to gas and almost $50 million on gas pipeline despite the fact that there is a gas shortage in the country. Last month, Nepra expressed serious concerns at the estimated project cost of $847 million for which the Northern Generation Company has sought a tariff of Rs 12 to 14 per unit.
MD Nandipur Power Project Muhammad Mehmood maintains that the cost of Nandipur project increased due to massive corruption and inordinate delays. He added that Nandipur plant machinery suffered at Port Qasim, which negatively impacted on its efficiency, and pleaded that Nandipur power tariff should be approved as per the following: Rs 41 on diesel as fuel, Rs 26 for furnace oil and Rs 12.47 per unit on gas.
The management of Nandipur project argues that when PC-1 was reviewed, the rupee-dollar parity was Rs 67 which accounted for the total cost of Rs 57 billion. But with a steady rupee depreciation the cost of the project naturally escalated in rupee terms and confessed that some companies were paid at Rs 102 to a dollar. Nepra's case officer said that rupees and dollars should not be compared otherwise the cost would be around Rs 90 billion.