The Indus or Sindhu Darya rises in the southwest of the Tibet Autonomous Region of China near Lake Mapam and is one of the longest rivers in the world (almost 3,000 kilometers). It joins the salty waters of the Arabian Sea, controlling the erosion of the coastal region and supporting the ecology.
But instead of using the Jhimpir wind corridor or the waters of the Indus to generate dirt-cheap electricity from hydroelectric power plants, the decision-makers in this gas-poor, oil-importing country prefer to use expensive electricity from thermal power plants, thus forcing the population to pay horrendous energy bills.
Our politicians have opted for the Independent Power Producers (IPPs) without examining or considering the faulty contract clauses. In this grim scenario where a large majority of the population of this country is suffering from the curse of IPPs, this author has found that the Nooriabad PP projects which are being constructed near the industrial zones under public private partnership (PPP) mode are a better choice for generating cheap power. In other words, Nooriabad power project is the first power plant under PPP mode in which the Government of Sindh has 49% stake while Technomen Kinetics (Pvt) Ltd, a private investor selected through an open bidding process, holds 51% stake.
To ensure transparency, a Request for Proposals (RFP) was published in the national press inviting proposals from interested parties. Following technical evaluation by a High Level Technical and Financial Evaluation Committee (TFEC), three companies were shortlisted.
The financial proposals/bids were unveiled in the presence of the bidders. The contract was awarded to the private investor who offered the lowest tariff in 25 years. Wartsila, Finland, prepared the project on a turnkey basis and carried out the commissioning tests and operation and maintenance work required by the energy regulator NEPRA.
The project was split into two plants of 50 MW each, so that the approval procedures remained under the jurisdiction of the Sindh province and no approval from the federal government was required. On the orders of the ECC (Economic Coordination Committee), the two plants were allocated 20 MMCFD of natural gas and a separate 20 km long gas pipeline was laid for this purpose.
The Sindh government had allotted 50 acres of land in Nooriabad, just outside the Nooriabad SITE area (100 km from the port city on the Karachi-Hyderabad highway). The Nooriabad PP projects are operated by two different companies – Sindh Nooriabad Power Company (Pvt) Ltd (SNPC) and Sindh Nooriabad Power Company Phase II (Pvt) Ltd (SNPC-II).
Initially, the plan was to supply power to HESCO for electricity consumption in the Nooriabad Industrial Area. However, due to lack of interest from HESCO, a power purchase agreement was signed with K-Electric. Due to the remoteness of the power plant, the provincial government constructed its own 95 km transmission line to supply power to the KE network in KDA Scheme 33.
The Nooriabad PP projects reached COD in January 2018, have delivered 4,566 GWh till date and generated revenues of Rs. 63.40 billion. The projects were financially structured as 80% debt and 20% equity (contributed by the Government of Sudan and private investors in the ratio of 49:51%). The entire Sindh Bank debt was prepaid.
The Nooriabad PP projects provide the cheapest electricity to KE. It was also admitted that the projects have repeatedly acted as black start power plants when there were nationwide power outages. The people of Sindh have also benefited from the Nooriabad PP projects as many have been directly employed and others are working in the industries they run.
The point is that all those who relentlessly attack the use of thermal power or poor IPP agreements should heap praise on projects that generate electricity at low prices, contribute to the state coffers and create jobs for the population.
Copyright Business Recorder, 2024
