ISLAMABAD: A high-powered committee, constituted to investigate the revised cost of Nandipur power project, has ruled out any unnecessary increase in the estimate to encourage a Chinese contractor to take up the project, saying it is even less than the actual cost, sources say.
The probe came following allegations by a former managing director of Pakistan Electric Power Company (Pepco), who accused the new government of being involved in a white-collar scam in the Nandipur power project and approached the Supreme Court for action.
In response to the accusation, the government formed an investigation committee, which has cleared the revised cost of the project in a report submitted to Prime Minister Nawaz Sharif.
According to sources, it was disclosed in a meeting of the Economic Coordination Committee (ECC) on July 30 that the report on the increase in estimated cost of 425-megawatt Nandipur power project had been submitted to the prime minister.
The report estimated tentative cost of the project at Rs58.4 billion and said this could undergo change subject to actual increase in insurance cost, construction rates, dollar fluctuation, taxes, cost of inclusion of gas component and damage to equipment.
In the ECC meeting, revised PC-1 for the power project submitted to the Planning Commission on January 16 as well as firmed up and tentative costs were explained.
The report described as justified the revised cost of Rs57.38 billion, which had already been approved by the Executive Committee of the National Economic Council (Ecnec). Original cost of the project was Rs22 billion. The ECC noted that the matter was in the Supreme Court and was sub judice.
The ECC directed the Ministry of Water and Power to ensure validity of all tentative costs and put in place a special monitoring arrangement. It should also share the report with Transparency International Pakistan (TIP), the ECC directed.
Earlier on June 27, the ECC had mulled over privatising the Nandipur power project to meet financing needs, avoid further loans and recover project cost early.
The ECC formed a task force comprising secretaries of finance, privatisation, law and water and power, giving it the task to review the project and make recommendations for its quick execution and running through a Special Purpose Vehicle (SPV), which will be used for privatisation.
According to the revised PC-1, the estimated cost of the project is Rs57.38 billion, of which Rs14.73 billion has been utilised by Pepco from its own resources and the remaining Rs42.64 billion will be funded through debt.
A debt of Rs19.15 billion has already been committed to by a syndicate of local banks and the ECC has approved issuance of government guarantees against the loan. The balance debt of Rs23.49 billion is yet to be arranged either through local or foreign banks.
The ECC has already waived Rs1.729 billion in demurrage and detention charges up to August 31, 2012. The charges estimated at Rs1.002 billion up to June 6, 2013 also need to be waived.
The agreement for the Nandipur project was signed in January 2008 and work was to begin in October the same year. However, the Law and Justice Division, approached in January 2009 for legal opinion on government guarantees, delayed the matter for two years and eight months until October 2011, causing cost and time overruns. So far, 60% work has been completed.