ISLAMABAD: The Ministry of Finance and the National Insurance Company Limited (NICL) have so far expressed their inability to offer reinsurance for $1 billion and $70 crore worth 2460MW power plants of Haveli Bahadur Shah and Bhikki, it has been learnt.
Well-informed sourced told Pakistan Today that these two power plants are already faced with one year delay with regards to their commercial operations. They said the finance ministry and NICL have expressed inability ostensibly due to the poor standard of work of Chinese companies and the usage of materials by the mentioned power plants. Reinsurance companies including the NICL were not ready to offer reinsurance apparently because of untested power turbines from General Electric (GE), use of Chinese material, and a debatable track record of performance by Chinese companies in the construction of Nandipur power plant, sources added.
“Without 30 years long reinsurance of Haveli Bahadur Shah and Bhikki power plants, the start of commercial production of electricity from these two plants cannot take place,” said sources.
They added that Prime Minister Shahid Khaqqan Abbasi has granted an approval to the National Power Management Company (NPMC) to get a No Objection Certificate (NOC) from NICL and ensure reinsurance of these two power plants from any private company as early as possible. However, masses will have to face power load-shedding during the upcoming month of Ramadan only due to no power production from these two 2460MW power plants.
The sources further said that the reinsurance of both 2460MW power plants was primarily the right of NICL as per the reinsurance ordinance. They said National Power Park Management had obtained the services of Pakistan Reinsurance Company for the collection of bids. The Pakistan Reinsurance Company is a subsidiary organisation of the Ministry of Trade.
Taking cognizance of the deteriorating situation regarding the commercial operations of Haveli Bahadur Shah and Bhikki power plants, PM has convened a meeting here at PM House and allowed the National Power Park Management Company to get NOC from NICL and ensure early reinsurance of the plants.
Official sources at energy ministry said that NICL will have to bear the heavy price of reinsurance in comparison to market price mainly due to the prevailing situation. Also, National Electric Power Regulatory Authority (NEPRA) has already allocated $8 million for reinsurance of one power plant and due to this measure the National Power Park Management Company will have to pay additional price of reinsurance from its profit, while selection of another company instead of NICL will require one or two months period.
When contacted with the National Power Park Management Company (NPPMC) CEO to get his words over the situation, he said NICL has given NOC and soon reinsurance will be made. He, however, said the process may take time if federal ministry insisted on a specific method of selection. He said without reinsurance of these two power plants, risk of starting commercial operation cannot be taken. The NPPMC board has also made reinsurance as a prerequisite, prior to the start of commercial operations from the new power plants, said NPPMC CEO.
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The two plants are Haveli and Baloki (not Bhikki)