Nandipur power project sovereign guarantee: summary not discussed in ECC meeting

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The Economic Co-ordination Committee (ECC) of the Cabinet in its meeting on February 22 this year reportedly did not take up a summary on grant of GoP sovereign guarantee of Rs 23.496 billion for the much-delayed 425-megawatt Nandipur Project, officials told Business Recorder on Sunday. The sources said the Engineering Procurement and Construction (EPC) contractors had already served a contract termination notice to Water and Power Development Authority (Wapda) because of delays in decision-making at the government level. This issue is already in the Supreme Court and a Commission accused former Law Minister Babar Awan of delay in clearing some issues.

According to official documents, additional funding of Rs 23.496 billion is needed to be arranged from a syndicate of local banks for resuming the construction activities and to complete the remaining work of the Combined Cycle Power Plant (CCPP), Nandipur.

Financing facilities from the Export Credit Agency (ECA) could not materialise because of an inordinate delay in the fulfilment of various conditions.

Moreover, a waiver of demurrage and detention charges up to June 30 this year against equipment and material lying at Karachi ports is also required for their release and shifting to site.

As per revised PC-1 (under the approval process), the estimated cost of project is Rs 57.380 billion, out of which Rs14.734 billion has been utilised from Pepco/ NPGCL''s own resources. Remaining amount of Rs 42.646 is to be funded through debt of which Rs 19.150 billion has already been committed by local banks'' syndicate. Issuance of GoP guarantee against this amount has already been approved by the ECC. Balance debt of Rs 23.496 billion is yet to be arranged either from local or foreign banks.

The sources said against estimated amount of demurrage and detention charges till June 30, 2013, waiver of Rs1.729 billion up to August 31, 2012 has already been accorded by the ECC of the Cabinet. The balance amount of the charges is Rs786 million up to June 30, 2013 which also requires an ECC waiver.

"EPC contractors have served a notice of termination of contract. However, negotiations are underway to remobilize the contractors," the sources said. ECP contractors had served termination notice in August last year. The Ministry of Water and Power has also requested the ECC to grant GoP sovereign guarantee for Rs 23.496 billion in favour of local and/ or foreign banks/ financial institutions against additional financing facility.

The sources said that this issue was expected to be taken up by the ECC in its upcoming meeting to be chaired by the new Finance Minister.


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