ISLAMABAD, Jan 15: A Wapda spokesman on Monday said that arrangements for second-hand thermal projects on rent had been made on the basis of international competitive bidding.

Commenting on a January 13 Dawn report, the power utility said the advertisement for the purpose had been carried in local newspapers and also in a Dubai-based newspaper in July last year. "To widen the competition and attract more attention, this advertisement was also posted on the extensively-visited Wapda website."

The spokesman clarified that the efforts to provide quick relief through rental power had been made in the best interest of the public and in a most transparent manner. Rental power is a stop-gap arrangement and that too for a comparatively short period. As such, the conditions and tariffs set for long-term projects and normal IPPs could not be applicable here, he added.

Dawn staffer adds: The spokesman did not say how many companies participated in the "International Competitive Bidding (ICB)" and what tariffs were offered by competing bidders, if there were any. Dawn has credible evidence that bids were never invited for two projects, to be situated at Sharaqpur and Bhiki.

The Dawn report was based on a unanimous determination of the National Electric Power Regulatory Authority. If the Wapda statement about the ICB is correct, then either Nepra was kept in dark during the tariff approval process or Nepra incorrectly said so in its determination.

A few paragraphs from the Nepra determination in case No Nepra/TRF-63/NPGCL-2006) are reproduced below for consumers to reach a conclusion.

Nepra in paragraph 5 of its determination wrote: "The process should have been carried out through international competitive bidding as laid down in the GOP power generation projects 2002 (and reiterated in tariff guidelines for IPPs, 2005) with the involvement of PPIB and the rates should have been based on a per kwh delivered basis only. Alternatively, complete information should have been provided to Nepra for approval before making any commitment of procurement or recommending a rental arrangement to the federal government".

In para 4 of the determination, Nepra clearly states that tariff setting was done through negotiations on unsolicited bids and not through ICB. It said: "We have been informed that NPGCL has already initiated the procurement of equipment from GE in accordance with the ECC decision including the rates proposed by GE Energy, through negotiation of unsolicited bids and that accordingly the plant equipment has been ordered, shipped by the supplier and is presently docked at Karachi port. We have not also been informed that CPPA, acting within NTDC has agreed to purchase power at the proposed rates. We have not been provided the details of any analysis or due diligence made by NPGCL or details of negotiation made at various government levels or the adequacy of gas allocation for the plant usage over the three-year period. We have also not been informed as to how any arrangement base on renting of plants is being entered into with GE, who is a vendor of new plants and may no longer be manufacturing the gas turbines configuration being acquired."

Para 3 states: "The authority agrees with the P&D regarding its observation with respect to the high price.

The rates agreed by NPGCL for Sharaqpur G/S plant and Bhiki G/S plant are quite high compared to the capacity charge rates allowed in the cases recently decided by the authority, even if the advantage of a lower rate in the later post debt period in these cases is ignored.

The capacity charge on a levelised tariff basis is also significantly high if compared with the most recent determination on which the MOW&P has raised observations with respect to rate allowed as being on the higher side and has required Nepra to reconsider and re-determine the matter. The proposed energy or variable charge is also high compared to the combined cycle mode of the recently decided cases."