Rental power plant eating up Rs. 780 million a month for generating 51MW

Another grave incompetence of the government’s poor planning was revealed on Monday, when it was admitted on the floor of the house that the ship-mounted rental power plant anchored in Karachi is eating up a staggering Rs. 780 million per month to generate merely 51 megawatts of electricity.

When one of the PML-N minister, Muhammad Pervaiz Malik, questioned the relevant ministry about Karkey Ship Mounted Rental Power Plant, the Federal Minister for Water and Power, Sayed Naveed Qamar, accepted in the National Assembly that indeed Rs. 780 million in paid on monthly basis to the power plant on account of Rental Service Fee (RSF).

The Karkey Rental Power Plant has a full capacity of producing 232 megawatts of energy and was brought to Karachi to smoothen out the drastic power shortage crisis in the country. The power plant’s underutilisation is costing a huge burden on the weakening economy of the country, with common people still suffering from power cut-offs for a number of hours every day.

Naveed Qamar explained that the agreement with SELLER, the owner company of the rental power plant, stated that the value of Fuel Payment Letter of Credit (FPLC) will be opened with effect from 20^thApril this year. He further said that it was the contractual obligation of Lakhar Power Generation Company Limited (LPGCL) to open and maintain FPLC in favour of SELLER for full utilisation and smooth running of the rental power plant. The value for FPLC is estimated to be Rs. 5 billion and the minister accepted that no bank has shown its interest to offer any terms for the establishment of FPLC.

At the time of its induction, the then minister of water and power, Raja Pervaiz Ashraf, stated this project as a major accomplishment in bringing in a new technology to meet the power shortfall in the country. Refusal of banks to provide FPLC is devastating the rental power plant project and it shows a clear mismanagement of the authorities.

It is perhaps the first time that any government minister has accepted the failure of this project on the house of the floor. It is certainly not a wise idea to carry on a loss-making project at such high costs where the benefits coming from it are minimal.

Posted by Farhan Hameed on Oct 19 2011. Filed under Business. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry