According to documents, Additional Secretary Incharge Water & Power, Younus Dagha briefed the Cabinet on the progress achieved so far with regard to 3,600 MW LNG based power projects proposed for PSDP funding. He referred to the decisions of Cabinet Committee on Energy (CCoE) meeting held on January 12, 2015 when it was decided that the option to execute 3,600 MW out of Federal PSDP would be explored wherein all the provinces would be given a choice to become investment partners by providing investment from their ADPs.
The Ministries of Finance, Planning & Development, Water & Power and Petroleum & Natural Resources would prepare a proposal for financing and subsequent privatisation of the projects. Secretary Water and Power would make a presentation outlining the plan with timelines. The Ministry of PNR would undertake infrastructure development for supplying 600 mmcfd of LNG to Punjab by end-2016. Three projects of 1,200 MW each would be developed at following locations: (i) Bhikki, District Sheikhupura; (ii) Balloki, District Kasur; and (iii) Haveli Bahadur Shah, District Jhang.
The Cabinet was informed that the Ministry of Water & Power has engaged Nespak for preparation of PC-1 and tender documents. National Transmission and Dispatch Company (NTDC) and Gas Holding Company Ltd (GHCL) would provide the required technical input. Nespak has been mandated to engage one international consultant to prepare quality documents on international standards. Preliminary studies for selected sites would be carried out and Nespak has mobilised teams for detailed investigations. Land acquisition process would be initiated by the provincial authorities. A request has been moved to the provincial government for assistance and provision of security.
Initial process would be initiated by GENCO Holding Limited. Later on it would be passed on to Pakistan Power Project Managing Co Ltd (PPPMCL) to execute and own the project. PPPMCL would revise its business plan for expanded mandate. PPPMCL has some financial resources at its disposal.
He informed the Cabinet that the company's approved structure has vacancies which need to be filled by professionals such as contract specialists, procurement specialists and legal consultants. It was proposed that NESPAK should be given the lead role in preparation of documents while GM (Planning Power) NTDC and GM (Thermal) GHCL would assist in the process. M/s Lahmeyer International, a renowned consultants group, is being associated by Nespak for job specific technical expertise & international accreditation of process and documentation.
Nespak would undertake detailed supervision whereas an international firm would be engaged as construction management consultant. A project steering committee would be responsible for execution of the three power parks. The committee, to be headed by Secretary W&P and comprising MDs of Nespak, NTDC, & SNGPL, Addl. Secy. (P) MOWP, Addl. Secy. Planning, Addl. Secy. Finance, Joint Secy. (T) MOWP, Addl. Chief Secy. (Energy) Punjab and other stakeholders would be constituted in the Ministry of Water & Power. As per CCE decision, the projects would be executed through federal PSDP. Provinces would be given an option to participate in equity investment. The overall project cost will be approximately Rs 360 billion.
The expected timelines were presented as follows: (i) appointment of Project Consultants - waiver by PEPRA Board, 28th February 2015; (ii) application for LoI, 10th Mar, 2015; Application for fuel price/tariff/generation licence, 10th March, 2015; (iii) issuance of LoI/tariff, generation licence/fuel price, April 2015; (iv) preparation of three site-specific feasibility studies, 15th April 2015; (v) preparation of PC-1, 15th April 2015; (vi) preparation of prequalification and EPC documents, 15th April 2015; (vii) approval by CDWP and Ecnec, 20th April 2015; (viii) advertisement for international pre-qualification, 25th April 2015; (ix) opening of proposals, 25th May, 2015; (x) completion of prequalification process, 5th June 2015;(xi) bidding, evaluation and award, 15th July 2015; (xii) completion of open cycle - 2400 MW - 20 months, March 2017 ; and (xiii) completion of combined cycle - 3,600 MW - 29 months, December 2017.
After detailed discussion, the Cabinet decided that selection of Nespak may be taken to PPRA Board for a waiver and PPPMCL may be assigned the task of project implementation by amending its Memorandum and Articles of Association. The Cabinet also decided that PPPMCL should opt for upfront tariff under process in Nepra and operate on profit earning basis to facilitate privatisation immediately after COD and GSA and PPA be signed by SNGPL and CPPA/NTDC, respectively.
It was also decided that the Planning Commission should associate its team with project preparation to see that there are no objections later on. According to the documents, Rs 180 billion required annually would be appropriated from the PSDP as non-lapsable funds, a part of which may be contributed by the provincial government. The O&M of the project would be outsourced for ensuring better performance and facilitation of early privatisation
The Prime Minister stated that it had been agreed in meetings of the CCE that the projects would be operational both on open and combined cycle by February 2017. The timelines had been changed unilaterally which was inappropriate. Delay in the completion of projects would not be allowed. He further stated that the cost of the projects had been enhanced from Rs 300 billion to Rs 380 billion. In addition, it had been decided that provinces would be asked to participate in the projects.
Finance Minister Ishaq Dar stated that the provinces which paid 20 percent project cost through ADP would get a representation through a nominee of the rank of a provincial Secretary on the implementation board of the projects. The Prime Minister noted with concern that one company was being assigned the task of projects implementation. He directed the creation of three companies, one for each project. This would ensure easy offloading of the projects. It was also decided that a fourth company for project management with established credentials will be selected through a transparent process to ensure that the implementation process is efficient and adheres to the agreed timelines.
It was felt that the structure of the companies would be made flexible for attracting foreign investment. The minister for water and power expressed the view that in case raising Rs 360 billion for the projects was difficult, the companies would generate some amount from the market outside PSDP.
The finance minister stated that supplier credit can be availed in the shape of a concessional loan from the countries where the equipment for the projects would be purchased. The Prime Minister stated that a decision on financing of the projects through the PSDP has been taken and would not be revoked. However, the option of supplier credit may also be examined. He directed that three highly qualified executives from the private sectors may be hired for running the three companies. However, for the fourth company, the executive can be hired from the public/private sector having impeccable credentials.