Nepra compromised on PC-1 by allowing outsourcing of O&M

ISLAMABAD: The 21-page special and commercial audit report of Auditor General of Pakistan (AGP) about Nandipur power project has revealed that the Ministry of Water and Power and management of the project have deviated from the PC-1 by approving the outsourcing of operational and maintenance of the project.
Both ministry and management have clearly violated the PC-I of the project, but the AGP did not mention how Nepra, the power sector watch dog, accorded approval to outsourcing of O&M and in this head the regulator had approved the variable O&M tariff of Rs0.46 per unit and fixed O&M at Re0.21 per unit. So the regulator is also in the line of fire, but the report did not highlight the particular fact.
The report also mentions that Board of Directors of Genco-III continued to stick to its stance that outsourcing of operation and maintenance of the project is legally not covered as PC-1 of the project does not allow it. But later the BoD also deviated from its stance and bowed down before the project management and top mandarins of the Ministry of Water and Power when it decided that EPC contractor, Dongfang, should be asked to operate and maintain the project for six months and during the period, the process of initiating ICB (international competitive bidding) should be started so that a company could be selected through transparent competitive bidding process for O&M contractor.
This means that the BoD has also changed its mind to hand over the project to any party as it was earlier saying that the project should be operated and maintained by the Generation company through its staff.
The report said the project was conceived to be opened and maintained by Generation company through its own staff and in the regard, 308 posts were approved in the revised PC-1 for operation and maintenance of the plant. The report, however, came up with right observation when it highlighted the point saying: “Had the plan of contracting out operation and maintenance been made part of the revised PC-1, the inordinate delay in resolving the issue of O&M would have been avoided.”
This means that the ministry, headed by then secretary, when placed the revised PC-1 in the Planning Commission for approval, should have incorporated that the O&M of the project will be outsourced through the ICB. But the ministry showed its inefficiency which led to inordinate delay in making the project operational. The project is currently being operated by GE and Albario staff in intervening period as a stop-gap arrangement, but the question arises under which mechanism, the project has been handed over to both the companies and has running of the project by GE and Albario any legal cover?
Sate Minister of Water & Power Ch Abid Sher Ali after getting the inputs from the relevant senior official of the ministry on the issue of outsourcing of O&M of Nandipur power plant responded to The News saying: “Yes, the ministry has deviated from PC-I, but with positive intent.”
He said: “In public sector Guddu power plant we are facing the problems of making the plant operational as whenever any spare part is needed in the head of O&M, the concerned Genco has to issue the tender and some time the aggrieved parties move the court of law and get stay and owing to this very reason some machines are non-operational. Keeping in view such kind of constraints, the ministry decided in a meeting that the O&M of Nandipur project should be outsourced under which the selected company that is to be having the contract to run the plant will be responsible to deliver the guaranteed electricity units and the said private company will be responsible to keep the project updated in terms of replacement of any spare part.”
The minister said that in case of O&M by Genco itself, the time is wasted in tendering and then getting the required spare parts and sometime the project remains non-operational just because of stay by the court in response to the aggrieved party plea that the process of tendering was non transparent. So to avoid the inordinate delay to this effect, the ministry has taken the decision to outsource O&M of Nandipur power plant. The minister insisted that Genco will continue to oversee and monitor the O&M by any party meaning by that Genco will be responsible for making the plant operational and well maintained.
“However, there is always a room to improve the PC-I of the project and this particular anomaly can also be rectified,” the minister argued. “The project has currently been handed over to GE and Albario for intervening period under the decision of Board of Directors.”
To a question, Abid Sher Ali said that the ministry is vigorously working for finalising the required documentation for initiating international competitive bidding and to this effect, the advertisement will be issued to the national dailies within the span of two weeks’ time seeking the expression of interests from interested parties for O&M contract of Nandipur power project.