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Hubco power plant offers govt buyout for Rs65 billion

By Khalid Mustafa
December 02, 2020

ISLAMABAD: In a major development, the Hubco Power Plant in Balochistan that operates only on one percent of its capacity in the entire year and the government owes it Rs260 billion as capacity payments for next seven years, has offered the federal government to buy it out for Rs65 billion.

Tabish Gauhar, Special Assistant to Prime Minister, confirmed to The News, saying: “CEO of Hubco Power Plant Khalid Mansoor along with his legal team came up with the proposal offering the federal government to buy it out at Rs65 billion.”

He said the power plant nominally contributes to the national grid by running at 1 percent capacity per year. “All of its units are RFO based and the government is paying capacity payments. The government has to pay Rs260 billion as capacity payment in the remaining period of power purchase agreement till 2027 and given the situation, the proposal from Hubco management is worth considering."

The Hub Power Plant is an RFO-fired thermal power plant, situated at Hubco in Balochistan. The plant was built in 1997 with Power Purchase Agreement of 30 years and supplies 1,200 MW (net) electricity to the national grid. It employs four units; each has a gross capacity of 323 MWs with a designated boiler, stream turbine and generator.

Due to the imported mix with the addition of coal and Re-Liquefied Natural Gas (RLNG) based thermal and combined cycle power plants respectively, cheaper power is now available in the NTDC system. The supply of power is also higher than the demand, resulting in low dispatch of RFO-fired power plants. “The use of Hubco plant has fallen to 1 percent per year.”

SAPM Gauhar said “I have floated counter proposal to Hubco CEO saying that the government will provide the liquidity of Rs65 billion if it converts its two units on Thar coal for generating 600 MW for Karachi and the remaining is used for installing the water desalination plant to provide 300 million gallons daily water to Karachi.”

Gauhar said that Hubco has already inked an MoU with K-Electric for providing electricity of 600 MW. This will be a win-win situation both for the Hubco management and the Pakistan government. The government that has to pay Rs260 billion in the shape of capacity payments in the next seven years will be able to offload its liability by just paying Rs65 billion.

To a question, he said that the amount will be arranged from the Karachi package. “Karachi’s water demand stands at 600 million gallons per day. With the proposal, Hubco will cater to 50 percent water requirements of Karachi."

Gauhar said: “We want to set the price of each water gallon at 50 paisas and the government will also re-negotiate to bring down the price of Thar coal to $25 per ton from $50 per ton. If that is done, then the cost of electricity from Thar coal will also come down."

The Special Assistant to the Prime Minister on Power said that Hubco power plant management team will now respond to the government on his counter proposal on Monday next after getting input from the owner of the plant.