The quest for cheap electricity

Rising in the southwestern Tibet Autonomous Region of China near Lake Mapam, Indus River or Sindhu Darya is world’s one of the longest rivers (nearly 2,000 miles). It unites with the salty waters of the Arabian Sea, containing erosion of the coastal area as well as supporting the ecology.

 

But the decision-makers of this gas-starved, oil-importing nation, instead of harvesting Jhimpir Wind Corridor or utilizing the waters of the Indus River to produce dirt-cheap electricity via hydel power plants, have opted for costly electricity by means of thermal power plants, forcing people to pay energy bills through the nose.

Our policymakers have opted for the independent power producers (IPPs) without examining or taking into consideration the faulty clauses of the agreements. In this gloomy scenario when a vast majority of people of this country is suffering from the curse of IPPs, this scribe has noted that the Nooriabad PP projects set up near the Industrial Zones under Public-Private-Partnership (PPP) mode are a better choice to generate cheap electricity. In other words, Nooriabad Power Project is the first power project in the PPP mode, where Government of Sindh is a 49 % shareholder, while Technomen Kinetics (Pvt) Ltd, a private investor, selected through an open bidding process, holds 51 % shares.

To ensure transparency a Request for Proposals (RFP) was published in the national Press seeking proposals from interested parties. After the technical evaluation by a high powered Technical & Financial Evaluation Committee (TFEC), three companies were shortlisted.

The financial proposals/quotations were unsealed in the presence of the bidders. The private investor, who had quoted the lowest levelised tariff for 25 years, was awarded the contract. Wartsila, Finland, prepared the project on turnkey basis and conducted the Commissioning Tests and Operations & Maintenance required by power regulator NEPRA.

The project was divided into two plants - 50MW each - so that the matters relating to approvals remained within the scope and jurisdiction of the Sindh province, without seeking any approval from the Federal Government. By an order of the ECC (Economic Coordination Committee), 20 MMCFD of natural gas was allocated to the two plants and a dedicated gas pipeline of 20km had been laid for this purpose.

The Sindh Government had allocated 50 acres of land at Nooriabad, just outside the Nooriabad SITE domain (100km from the port city on the Karachi-Hyderabad Highway). Nooriabad PP projects are being operated by two separate companies - Sindh Nooriabad Power Company (Pvt) Ltd (SNPC) and Sindh Nooriabad Power Company Phase II (Pvt) Ltd (SNPC-II).

Originally, it was conceived to supply power to HESCO for the consumption of electricity in Nooriabad Industrial area, however due to lack of interest of HESCO, a Power Purchase Agreement was signed with K-Electric. Due to distant location of the power plant the provincial government had constructed a dedicated 95km Transmission Line, which supplies electricity to KE Grid Station at KDA Scheme 33.

Nooriabad PP projects achieved COD in January 2018, dispatched to date 4,566 GWh and generated a revenue of Rs. 63.40 billion. The projects were financially structured as 80% debt and 20% equity (contributed by GoS and Private Sector Investor in 49:51 per cent ratio). The entire debt of Sindh Bank had been retired before time.

Nooriabad PP projects provide the cheapest electricity to KE that too had acknowledged that the projects had repeatedly acted as Black Start power plant when there was a nationwide tripping. People of Sindh also benefitted from Nooriabad PP projects as many were directly hired and others work in the industries powered by them.