Govt recovers Rs2.12 bn advance payment from Chinese company

525MW Chichoki Mallian project

ISLAMABAD: The government has recovered Rs2.12 billion mobilisation advance payment from Chinese company M/S Dongfang Electric Corporation Limited that was paid to it on account of Engineering Procurement and Construction (EPC) contract to implement 525 Megawatt Chichoki Mallian power project.

The project was signed between Northern Power Generation Company Limited (NPGCL) and M/S Dongfang Electric Corporation Limited on April 1, 2008.

The total value of contract was $345.45 million and mobilization advance equal to 10 per cent was made to Chinese company in August 2008.

The physical work on the project could not be started till 2015 and the Government of Pakistan decided to close the project in May 2015.

It was also decided to recover advance payment from the company.

As a result, the government held negotiations with the company for recovery of the advance payment. The company returned 10 per cent advance payment amounting to Rs 2.12 billion on September 26, 2017.

The Pakistan People's Party (PPP) government had signed the contract with the Chinese firm for setting up a power project as part of its plans to generate 2,200 MW within a year to cope with a crippling energy shortage in the country.

Former prime minister Yousuf Raza Gilani had witnessed the signing ceremony of contract for the 525 MW Chichoki Malian combined cycle power project.

The power plant was approved by the government for fast-track implementation by China's Dongfang Electric Corporation. Three thermal power projects of cumulative capacity of about 1,300MW were declared to be implemented on fast-track basis.

These projects were (i) Nandipur combined cycle power project of 425-525MW capacity, (ii) Chichoki Mallian combined cycle power project of 425-525MW, and (iii) commissioning of the UAE-gifted combined cycle power plant of 320-350MW at Faisalabad.

First two power projects had suffered delay as the Law Ministry was reluctant to vet the government guarantees sought by the contractor.

The present government revived Nandipur power plant project but decided to close Chichoki Mallian  project.