ISLAMABAD: The much-hyped Nandipur Power Plant – inaugurated by Prime Minister Nawaz Sharif on May 31 of this year and shut down due to technical problems after only five days of operation – has become a liability for the embattled government.

According to documents obtained by DawnNews, the cost of the project has increased manifold from the original estimate of Rs27 billion to Rs84 billion.

Official documents state that said that Engineering, Procurement and Construction (EPC) costs and related costs were $502.318 million, Taxes & Duties $21.773 million, Emergency Spare parts $15 million, O&M Mobilisation $5 million, Non-EPC Construction $56.750 million, Financial Fees & Charges $16.838 million, Interest During Construction (IDC) $229.491 million. The total comes to $847.016million.

A Nepra official said the Rs84 billion-figure had been determined from official documents relating to the project, which would be presented in a public hearing, scheduled to be held on September 24.

But when asked for comment, Nandipur Power Project Managing Director Mohammad Mehmood said he was unaware of the increase in cost, saying that he was unable to respond on how the National Electronic Power Regulatory Authority (Nepra) had determined the cost to be Rs84 billion of the Nandipur Power Project.

According to the MD, the project cost currently stands at Rs57 billion, which was the amount approved by the Executive Committee of the National Economic Council (Ecnec) when it greenlighted the project on July 4, 2013.

He said that the reported cost in US dollars of $847million is equal to Rs57billion only at an exchange rate of Rs67 to a dollar.

According to the project’s PC-I, the entire project was supposed to cost Rs22 billion. However, due to a seven-year delay, the project cost went up and the Pakistan Muslim League-Nawaz (PML-N) government in the centre jacked up by cost by Rs35 billion, to Rs57.4 billion.

Recently, the Northern Power Generation Company (NPGC) sought Nepra approval to fix the power tariff from the project for 30 years at Rs18.16 per unit for power made from furnace oil, Rs27.91/unit for high speed diesel (HSD) and Rs8.44/unit for natural gas.

Sources in the Ministry of Water and Power said Nepra was perturbed over the increased cost of the project and its tariff rates. They said certain officials were anxious not to pass on the additional burden to already over-burdened power consumers.

Nepra advertised 13 questions and sent them to all stakeholders, including the ministries of Power, Finance, Planning as well as the Sui Northern and Sui Southern as well as consumer protection associations.

Arshad Abbasi, an energy adviser at the Sustainable Development Policy Institute (SDPI), told DawnNews the project should be scrapped out right as it would further burden the national kitty and the already-burdened power consumers of the country.

He also raised questions about the efficiency of the project, which he claimed would consumer more furnace oil, gas and diesel when compared to the efficiency of the Guddu power project.

Published in Dawn, September 17th, 2014