Chinese company may be awarded Chichoki Mallian project
RECORDER REPORT
ISLAMABAD (December 27 2007): The federal government is likely to award 450-500 MW Chichoki Mallian (Sheikhupura) thermal power project to Dong Feng of China after the proposed sponsors - Qatar Investment Authority decided to stay away, official sources told Business Recorder.

The Economic Coordination Committee of the Cabinet will take up the issue at its meeting on Thursday, December 27 with Prime Minister Muhammedmian Soomro in the chair.

The ECC, in its meeting on October 31, 2007 had directed the Ministry of Water and Power to issue a notice to the proposed sponsors including Alstom-Marubini and QIA to come up with a deadline within a week as to when they intend to file an application to the National Electric Power Regulatory Authority for tariff fixation and project completion to avoid further delay.

The sources said the GoP had written several letters to QIA for this purpose, but they did not pay any heed despite the fact that gas allocation deadline of November 30, 2007 has expired.

Now the government is considering awarding the contract to Dong Feng on same terms and conditions applicable to 450-500 MW combined cycle power plant at Nandipur, the sources maintained.

Though the government had accepted the increased project cost of $525 million from the original estimate of $350 million due to involvement of some top former government functionaries, QIA failed to honour its commitment. The sources said the Chinese company would complete the project within the stipulated cost of $330 million.

The sources said the ECC will also consider a proposal of Private Power Infrastructure Board to indemnify foreign lenders and companies investing in projects against changes in Pakistan's laws which could affect the legality and enforceability of the power sector Implementation Agreement (IA) and Power Purchase Agreement (PPA) and government guarantee.

They said companies investing in projects were facing lending problems, as foreign lenders were reluctant to extend loans in accordance with Pakistani laws. "Each foreign lender wants direct agreements (IA and PPA) and GoP guarantee to be subject to and governed by the laws of England to provide protection to them as per normal practice with cross-border limited recourse financing of projects of this nature involving international sponsors and lenders, against the invalidity and enforceability of the GoP guarantee due to change in the laws of Pakistan," the sources added.

According to the sources, the ECC would also discuss wheat and flour crisis in the country as prices have increased by Rs 100 per 100-kg bag on Wednesday after Punjab imposed ban on inter-provincial movement of the commodity.

The sources said the Ministry of Food, Agriculture and Livestock (Minfal) will submit a report to the ECC regarding availability and releases of wheat to flour mills by the provincial governments. The Trading Corporation of Pakistan (TCP) will also present a report on imported wheat consignment delivered so far and that of in the pipeline.


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