The government has agreed to provide 14 percent mobilisation advance and GoP guarantee to Ms Walters rental power project after a meeting between Water and Power Minister Raja Pervez Ashraf and Oklahoma Governor David Walters, accompanied by his technical team in Islamabad.
Well-informed sources in the PPIB told Business Recorder that after approval by the National Electric Power Regulatory Authority (Nepra), rental service contracts were signed by Genco-IV with Karkey (249 MW) and Walters (205 MW) at Korangi. These were based on confirmed Stand By Letter of Credit (SLBC) for monthly rent charges. However, due to financial difficulties, it was not possible for PepcoGenco-IV to arrange SLBC from banks.
Realising the situation, Karkey had agreed to accept GoP guarantee in lieu of SLBC and is moving forward with the project expected to be commissioned by the end of the current year, the sources claimed. However, Walter's had not accepted this arrangement. "The PPIB has recommended to the government that if amicable agreement with Walter's is not concluded promptly, Pepco may have to face litigation," the sources added.
According to sources, PPIB Board members also suggested a meeting with Walter's to convince them to accept the arrangement of GoP guarantee in lieu of SBLC and conclude the way forward within a definite timeframe. "The PPIB Board had advised that Secretary Water and Power and Pepco should hold meeting with the sponsors of Walters' rental project to negotiate provision of GoP guarantee in lieu of SLBC," the sources said.
Further, Secretary Water and Power was asked that negotiations with Walter's should be concluded within a reasonable cut-off date so that the government should be aware of the commissioning of the project, or otherwise, and may take appropriate measurers to fill the gap if required, the sources maintained. An official statement issued after the meeting states that both sides discussed proposals and issues relating to upcoming IPPs and rental power plants.
Governor David Walters apprised the ministry of the schedule and progress on the upcoming rental power plants being commissioned at Naudero (102MW) and Korangi (205MW), assuring that his company will endeavour to make these plants operational by December 2009. Walter's also informed the Minister for Water and Power regarding his efforts to bring US financing in Pakistan for power sector support at investors' risk, the statement further added.
During the course of the meeting both sides discussed prospects of more gas-based IPPs in Pakistan. Power sector analysts are of the view that the government will not be able to eliminate loadshedding completely by the end of current year as has been repeatedly claimed by the Minister for Water and Power. The rationale behind the claim of the analysts is that some of the rental projects in the pipeline will be delayed.