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November 26, 2016

Nandipur plant may remain closed for 10 more days


November 26, 2016

Losses reach Rs12.3 bn after Nepra disallows Rs20 bn additional cost in tariff

ISLAMABAD: The Nandipur power project, currently non-operational for about three months, will remain non-functional for about 10 more days, as the steam turbine is not overhauled yet.

Two units are ready for electricity generation after major cleaning and annual maintenance of the plant. But since no tariff has been given by the National Electric Power Regulatory Authority (Nepra) for the single cycle, it will remain non-functional for about 10 more days until the steam turbine gets ready. 

However, the top ministry officials are still in a fix whether the plants should be made operational even after overhauling was over. The Ministry of Water and Power has admitted that Nandipur power plant had sustained a loss of Rs12.3 billion so far as Nepra has disallowed over Rs20 billion cost in tariff, resultantly the top management of the project is unable to pay back the loans it borrowed for the project. Since its commissioning date, the project has faced a loss of Rs12.3 billion in the wake of the refusal by Nepra to allow over Rs20 billion as increase in the cost of the project in tariff. The total cost of the project stands at Rs58 billion, out of which Rs53 billion had been spent.

The remaining amount will be spent on the gas conversion of the project by February 2017. “This has virtually rendered us unable to pay the loans of Rs34 billion, borrowed for the project,” said Joint Secretary (Power) Zargham Eshaq Khan.

The Engineering, Procurement and Construction (EPC) cost not being allowed in the tariff will automatically park in the system as uncovered amount, meaning by that it would add to the circular debt. The loss of Rs12.3 billion the project sustained will appear in the circular debt, Khan added. “So far the power regulator has denied including the Interest During Construction (IDC) that hovers at Rs14.5 billion till the completion of the project as per the revised date,” he said.

However, the top management of plant is weighing the option to submit the revised petition in Nepra, but after the ongoing major cleaning, annual maintenance of the plant and up-gradation of the Furnace Oil Treatment Plant (FOTP) is over, the official said.

The faulty FOTP’s capacity, the official said, to treat the furnace oil stood at just 60 per cent owing to which the Nandipur power plant was unable to produce 425MW round-the-clock. The required electricity of 425-460MW can only be produced on sustainable basis when the FOTP gets upgraded. Now Dongfang, EPC contractor, has managed to import two more skids which have been installed at the FOTP that will enable it to treat the furnace oil at 100 per cent round-the-clock.

Earlier, Dongfang was told in plain words that if it failed to upgrade the FOTP, the ministry would not hesitate to en-cash the bank guarantee of $35 million that Dongfang had deposited with the government for another 550MW power plant that was to be installed in Chichoki Malian in Punjab. The Dongfang was also contractor for Chichoki Malian project.

Nandipur and Chichoki Malian power projects were conceived sometime in 2005-06 during the Musharraf regime, but later on Chichoki Malian project was scrapped.

On top of that a gas pipeline, the official disclosed, is being laid down by the Sui Northern for Nandipur power plant and the process to covert the plant on gas has also has been launched. A tender for converting the plant to gas was given and General Electric Company won the tender. Hopefully, the conversion of the plant to gas will be completed by February 2017. This is how the plant will start operating on RLNG owing to which the capacity of the project will go up to 525MW.


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