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September 12, 2015
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Failure of Nandipur project a result of bureaucratic incompetence

National

September 12, 2015

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ISLAMABAD: The faux pas caused by delay in operationalization of the Nandipur power plant despite its completion and successful test run long time ago, which has brought immense embarrassment to the government, is a classic specimen of standard bureaucratic ineptitude and incompetence.
The case for outsourcing the operation and maintenance (O&M) services of the plant is stuck up between the boards of directors (BoDs) of Nandipur Combined Cycle Power Plant and the owner power Generation Company-III (GENCO-III) for the last seven months.
“The usual pathetic and unproductive correspondence was going on between the two boards during this period,” an informed official told The News.
He said that now when Prime Minister Nawaz Sharif has decisively intervened after a lot of hue and cry, the Nandipur plant is going to become operational in a week or so following the award of the O&M outsourcing to a foreign company.
It is surprising that despite the keen interest and intense efforts of the prime minister to overcome the challenge of power shortage by end-2017 the Nandipur plant was trapped in only appalling paperwork for such a long time.
The plant is currently under shutdown status only for want of the arrangement of O&M services, which is purely an administrative matter and there is no technical problem for its smooth and trouble free functioning, the official said.
It is clear from the story narrated to The News that indecisiveness, evasion of responsibility and lack of ownership and coordination are the actual reasons behind non-functioning of the Nandipur plant.
Ironically, in late 2014 in the International Competitive Bidding (ICB), M/S TNB Malaysia was evaluated as lowest responsive bidder and recommended by consultant NESPAK for award of the O&M contract agreement. Before that, the Nandipur management initiated the O&M outsourcing case through the GENCO-III chief and got necessary approval of the ministry of water & power secretary.

Prior to finalizing the bidding documents, input from all the stakeholders was got and duly incorporated in them.
The official said that the case for approval of the award of O&M outsourcing contract was sent to the GENCO-III BoD on October 29, 2014. The BoD (GENCO-III) principally endorsed the proposal of engaging O&M service provider and directed the Nandipur management to go ahead, negotiate and finalize the contract price as well as the terms and conditions with M/S TNB, Malaysia and then put up the case again to the BoD for final approval before signing the contract.
He said that when the case was again presented, after duly addressing the observations along with other agenda items, the GENCO-III BoD took an indifferent stance to the matters of Nandipur project by setting aside all the agenda items for getting approval from GENCO-V BoD instead of GENCO-III BoD.
However, due to intervention by the water and power minister in his meeting with joint BoDs of GENCO-III and GENCO-V, the GENCO-III BoD started considering the agenda but only after the cases recommended by the GENCO-V BoD. All the information or clarification regarding any matter has been provided by Nandipur management to GENCO-III.
The official said that after a lapse of seven months, the GENCO-III BoD scrapped the tender of O&M outsourcing and required prior approval from the Executive Committee of National Economic Council (ECNEC) for fresh case, in spite of the fact that O&M outsourcing of GENCOs is part of the National Power Policy 2013. The National Electric Power Regulatory Authority (Nepra) and the water and power ministry have also directed to outsource the O&M services of the Nandipur power plant.
The plant achieved its contractual Commercial Operation Date (CoD) on July 23, 2015 after successful Performance Tests and Reliability Test Run (RTR). Both the output and efficiency of the power plant have been found 4.68pc and 0.47pc respectively above the contractual guarantees.
However, after its successful testing and operation, the same was stopped on August 10, 2015, as there was no arrangement of O&M services because the EPC (engineering, procurement and construction) contractor was not obliged to operate further under the agreement.
The official said that the shutdown status of the power plant after its completion and RTR was not a new development and all the concerned knew very well owing to the non-award of the O&M outsourcing.
However, due to inadequacy and lack of capacity of the in-house staff and resources, there was no option left with the technical team of the Nandipur project but to keep the plant closed rather than handing it over to the inexperienced personnel.
The official said that in spite of successful completion of the project, the Taking Over Certificates (ToCs), STG (Steam Turbine-Generator) and that of BoP (Balance of Plant) have not been issued to the contractor to keep extra leverage in favour of the employer.
The Fuel Oil Treatment Plant (FOTP) was supplied by the EPC contractor for treatment of High Sulfur Furnace Oil (HSFO). The nameplate capacity of the plant was in accordance with the contract agreement. However, the actual performance of the FOTP can only be confirmed after testing and commissioning at site, with the supplied untreated HSFO, the official said.
After installation of the FOTP, the testing and commissioning work was started by the EPC contractor through M/S GEA Weastfalia in September 2014.
However, after repeated attempts, the optimum capacity of the FOTP could not be achieved. The employer and the engineer immediately took up the matter with the EPC contractor for its early resolution as per its agreement.
In the meantime, an inquiry was conducted by the water and power ministry to find out the issues, reasons and solution regarding the FOTP in May 2015. The Nandipur management had already taken up the matter with the EPC contractor for its resolution under intimation to all the concerned.
The actions of the GENCO-III and its BoD have made the O&M process controversial. The case for engaging EPC contractor for the O&M services as a time gap arrangement was submitted in June 2015. As, till then, the deliberations on long term O&M outsourcing were underway by the GENCO-III BoD, therefore the peculiar risks associated with the short term O&M services viz-a-viz long term O&M outsourcing were included in the proposal just to keep all the stakeholders on board regarding the shortcomings of the short term O&M services by the EPC contractor. The GENCO-V BoD also endorsed the same proposal along with its pros cons and risks.
The official said that majority procurement was made during the tenure of the previous regime while the present government was more involved in execution and assembling.

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