Chinese firm gets LoI for Gwadar coal power project

ISLAMABAD: The Private Power and Infrastructure Board (PPIB) on Tuesday issued a Letter of Interest (LoI) to China Communications Construction Company (CCCC) for the development of 300-megawatts imported coal-fired power project in Gwadar at a cost of Rs55 billion.

The project is part of the China-Pakistan Economic Corridor (CPEC). PPIB Managing Director Shah Jahan Mirza and CCCC Vice President Xu Jun signed the document.

CCCC will develop the 300MW power project by utilising imported coal in Gwadar.

The company will obtain tariff approval from the National Electric Power Regulatory Authority (Nepra) and start construction after achieving financial close. The project has already been approved by the Joint Cooperation Committee (JCC) of the CPEC and the PPIB Board.

Gwadar is blessed with a deep-sea, warm-water port, which is considered a crucial link between the ambitious One Belt, One Road and Maritime Silk Road projects.

With the addition of 300MW Gwadar Power Project, the portfolio of power generation projects being processed by PPIB has increased to nine coal-based projects of 8,220MW and three hydro-based projects of 2,714MW, constituting a total of 12 projects of 10,934MW under the CPEC.

The Economic Coordination Committee (ECC) of the cabinet allowed the award of Rs55bn worth of 300MW coal power project in Gwadar to a Chinese firm a month ago without bidding at a single-point meeting.

The authorisation was given a special case under Rule 5 of the procurement rules that allowed project award in exceptional circumstances. The rule stated that “whenever these (Pakistan Procurement Regulatory Authority) rules are in conflict with an obligation of commitment of the federal government arising out an international treaty or an agreement with state or states or any international financial institutions, the provisions of such international treaty or agreement shall prevail to the extent of such conflict”.

Originally, the project was of 600MW capacity, but was reduced to 300MW on the request of the Chinese in November 2014.

At a meeting of the Joint Energy Working Group in August, the Chinese government nominated CCCC, a state-owned entity, to invest in the project and Pakistan readily agreed to oblige. The company requested the PPIB in September 2015 for the development of 300MW plant on imported coal using supercritical technology.

Reports suggest the PPIB put on the record of the ECC that the proposed plant and machinery of the Gwadar project were not of supercritical technology.

The summary to the ECC claimed that in November 2016, Prime Minister Nawaz Sharif on the power ministry’s request desired the ministry and the PPIB to proceed on the earlier application of CCCC for the grant of LoI/letter of support for the project “after completion of necessary legal formalities as the project was part of the CPEC”.

The government announced in April 2015 the power generation policy. The policy required the project should be covered by bilateral agreements between the government of Pakistan and foreign governments, thus enabling the exemption of pre-award process and procedures, including pre-qualification.

The ECC approved the proposal by the power ministry for authorising the PPIB to proceed with the award of the project to CCCC under Rule 5 of Public Procurement Rules 2004.

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