PM not to inaugurate Bhikki power plant today

ISLAMABAD: Prime Minister Muhammad Nawaz Sharif has postponed his visit to Bhikki near Sheikhupura today (Monday) where he had to inaugurate $540 million 1,156 MW power plant, the Prime Minister House announced in a statement on Sunday.
As part of its policy to eliminate loadshedding across the country in minimum possible time, the government is establishing 1,156MW Power Plant in Bhikki, Sheikhupura, at an overall cost of $540 million.
The project is being established despite the opposition’s campaign of character assassination of the government on account of power plants.
The inauguration is practical rejection of the campaign. The government sources maintain that the project is being established under the Power Policy 2015 of Prime Minister Nawaz Sharif who is determined to weed out loadshedding in the minimum-possible time.
The Bhikki project would be starting production within 16 months which is being conceived as one of the world’s leading initiatives with most efficient machines and the lowest project cost.
The sources maintained that the per unit cost of electricity generated by the Bhikki plant is expected to be less than Rs9 per KWh due to its high performance parameters and low project cost resulting in a substantial savings of over Rs8 billion per year to the national exchequer.
The sources told The News on Sunday that the project was proceeding on a very fast track to meet its compressed completion timelines.
The Bhikki plant is scheduled to start simple cycle operations in February 2017 while the operations on combined cycle mode will commence from December 2017.
The project has achieved initial milestones that include obtaining the Letter of Intent from the federal government, determination of Upfront Tariff by Nepra and acquisition of land.
The Environmental Protection Agency has issued its NOC for the project confirming no environmental hazards emerging from the setting up of this project.
A load study has also been carried out and the NTDC has confirmed power evacuation from the project up to 1,400 megawatts. The company is in the process of finalising the concession documents including IA, PPA and GSA with the respective organizations /ministries which are expected to be inked soon.
The sources pointed out that the Bhikki Project shall use RLNG as its primary fuel and shall employ the highest efficiency machines to keep the cost of electricity to the end consumer at its bare minimum.
The EPC contract of the project has been awarded to M/s Harbin Electrical International Company of the People’s Republic of China at a total cost of US$539,260,000 which includes both Offshore and Onshore EPC costs.
The EPC contractor shall install the most efficient H-series gas turbines at the plant manufactured and guaranteed by the General Electric of USA. At present, no other power plant in the country claims to have so high thermal efficiency and such a low EPC cost.
The Long Term Service Agreement (LTSA) is being signed separately between the Project Company and General Electric USA to take care of the operations and maintenance of the gas turbines after the commissioning of the project.
The EPC contractor has already started engineering surveys and other preliminary works at the site. The SNGPL shall be the supplier of RLNG to the Bhikki Project under a Gas Supply Agreement (GSA) to the extent of 200 MMCFD.
The existing gas pipeline infrastructure which has the requisite capacity to transport the required quantity of gas from Karachi to Bhikki shall be used to supply RLNG to the Bhikki Power Plant.
The electricity produced from the project shall be sold under a power purchase agreement between the CPPA and Quaid-e-Azam Thermal Power (Pvt) Limited, a company established by the Punjab government to install and operate the project. Like those of other IPPs, the obligations of the CPPA shall also be covered by a sovereign guarantee of the Government of Pakistan.
Two major local banks, National Bank of Pakistan and Habib Bank Limited, shall be the lead arranger for the financing of the project which shall be on a debt:equity ratio of 75:25.
The debt financing of approx Rs65 billion shall be done through syndication while the lead banks shall also act as the underwriter for the entire loan amount. The 100% equity shall be contributed by the Punjab government.
It may be recalled that while Nepra has allowed an upfront rate of the RLNG electricity as Rs9.77/KWh based on LNG price of $10.83/MMBTU, the per unit cost of electricity generated by the Bhikki plant is expected to be less than Rs9 KWh due to its high performance parameters and low project cost resulting in a substantial savings of over Rs8 billion per year to the national exchequer.