ISLAMABAD: Prime Minister Nawaz Sharif will inaugurate on Friday the 404MW Uch Power Project-II in Dera Murad Jamali, Balochistan, despite inability of the agencies concerned to provide supporting infrastructure for sustainable utilisation of additional capacity of the complex.

This will be the second major power project to be inaugurated by the prime minister in a week, suggesting that the PML-N government is determined to show that its efforts to ease the crippling energy crisis are bearing fruit.

In both the projects, however, the government agencies have not been able to fulfil the laid down criteria for starting commercial operations of the new units.

“Bureaucrats in the public-sector entities concerned are attempting to cover up their incompetence by taking advantage of the keenness of the political leadership to demonstrate economic progress through ribbon-cutting,” said a former managing director of the Private Power and Infrastructure Board (PPIB).

An official said the Uch-II, a private project owned by GDF Suez, achieved “commercial operations” early this month after two public sector organisations — the Oil and Gas Development Company Limited (OGDCL) and the National Transmission and Dispatch Company (NTDC) — made temporary arrangements. Resultantly, the government agencies would be required to pay capacity payments for more than 900MW because of their own fault even though they would not be able to inject such quantities into the system.

The project involves substantial fixed amounts to be paid as capacity payments to the project sponsor.

The official said the gas field owned by the OGDCL was not ready yet to deliver gas as per contractual specifications and the NTDC had failed to lay a 125km additional transmission line to absorb the full load of (about 990MW) Uch-I and Uch-II projects, located next to each other.

The public exchequer and consumers are estimated to suffer a loss of Rs7-10 billion per year until this transmission line is installed.

The OGDCL, in addition to Uch-I, can currently meet only half the gas requirements of Uch-II and that too provided unprocessed gas is used. As a result, capacity utilisation beyond the 935MW MARK cannot be termed reliable.

Sources said the Uch Power had already started to state on record that it was receiving unprocessed gas.

They say that any additional mixing of the unprocessed gas would take the H2S content to much higher levels and expose the personnel and equipment to serious hazards. “If they provide full gas supply, the H2S content would go beyond 80ppm which is disastrous for men and machinery,” said an expert.

Even if the gas was made available, the NTDC’s failure to lay 70km of required 220 KVA transmission line has created a bottleneck, because it cannot transmit more than 700-750MW on sustainable basis.

Effectively, the Uch-II will demand full capacity payment (372 MW) while the actual power off-take will be half of it. Alternatively, Uch-I’s power generation will have to be curtailed by the same amount of power to ensure full dispatch of Uch-II.

Under different scenarios and assuming more than a year of time required to fix the transmission issue, the losses to the national exchequer will be anywhere between Rs7bn and Rs10bn.

When contacted, the Prime Minister Secretariat officially confirmed that the prime minister would inaugurate the project and claimed that the OGDCL was fulfilling its obligation as demanded by the power producer.

It said the OGDCL had started full gas delivery to run the entire complex for testing. “Since the achievement of commercial operation on April 4, OGDCL has been supplying reliable gas to both Uch-1 and -II for smooth operations,” it said.

It did not comment on lack of transmission line.

The official said the prime minister was misled to believe that inauguration of Guddu Power Project would enhance its capacity from 1,650 to 2,400MW with addition of 750MW. He said the power plant was ready but the new 220 KVA transmission lines to support the additional power have yet to be built.

As a result, to enable the new unit to be dispatched, the Genco had to shut down four old steam turbines.

Also there is no gas available for additional plant capacity. Even the existing plant was not getting full gas allocation to utilise optimum generation capacity, an official of the PPIB said, adding that practically Guddu would produce less than 1,600MW in the foreseeable future.

He said the PPIB had repeatedly been writing letters to the OGDCL and NTDC for delays in their contractual obligations at Uch and Guddu.