Rental Power Projects

8/13/2019 Rental Power Projects

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FACTS & FIGURES BEHIND THE

SCANDAL

BILAL IFTIKHAR ERP# 05854

RENTAL POWER PROJECTS


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PRESENTATION OUTLINE What is RPP?

What was the need of RPP in Pakistan?

Brief history of the contracts &procedure

Corruption in RPP,,, Truth or Lie!!!!!

Verdict by Supreme court Conclusion

Q & A


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INTRODUCTION TO RPP RPPs are used to meet short term

energy requirements. They are mostlyused as temporary energy source

providers. They are typically commissioned on

4~6 moths basis based on availabletechnology.

Rental periods are normally installedfor 5 ~ 7 years depending upon thecountry requirement.


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INTRODUCTIONTO RPP The rental power business has been

around for decades, but it has gainedlarger publicity in the midst and

aftermath of the power shortages andtransmission problems that plaguedCalifornia in USA and other places, Asianand African Block including South WestAsia (India and Pakistan) during 2002

onwards. Utilities scrambled forsupplemental power to compensate forinadequate transmission capacity,inadequate power generation capacity,and during severe weather conditions.


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INTRODUCTION TO RPP Rental power plants have been set up in

the US, UK, India, Bangladesh, Kuwait,

Sri Lanka, Turkey, UAE, Saudi Arabia,Iraq and Palestine & now in Pakistan as

well.

The concept was introduced in Pakistan

in 2007 when two projects were awarded

to GE and APR, both from the US for

150MW and 136MW each.


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WHATWAS THE NEED??? Severe Energy Crisis : Electricity Crisis in Pakistan is one of the

severe challenges the country is facing today.

Electricity is essential part of our daily life andits shortage has severely affected the economy

and overall living of ours. Pakistan is currently

facing up to 18 hours of electricity outage a day,

is expected to face more if not dealt with intime.

Current Energy Annual Shortfall goes even up to

6,000 MW. Annual Increase in Energy Demand:

8-12%. Peak Demand: 13,000 18,000 MW.


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ADVANTAGES OF RPP Short Term solution for emergency requirement

accepted internationally.

No long duration commitments as in the case of

IPPs. Quick delivery of power due to short construction

period.

Services acquired without buying the equipment.

High availability matching that of new IPPs.

Supplemental power to compensate forinadequate transmission capacity.

Installation in a much smaller area, thus could beinstalled at choice stations.


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INCEPTION OF RPPS IN P KIST N In 2006, when the energy short fall was 1000 MW,

the GOP decided to overcome this with RPP & twoagreements of 150 MW & 136 MW were made.

Process for Award of GE Energy and Alstom PowerRentals:

Two Rental Power Proposals received on13.07.2006 from GE & Alstom.

GE and APR proposals summarized below

150 MW GE Energy Rentals: 10% Advance Payment against Advance Bank

Guarantee. Monthly Advance Payment of 1% forfirst 4 rental months. Balance 86% in 36 equalMonthly Rental Services Fee. Confirmed andirrevocable Drawdown Letter of Credit.


9/19

INCEPTION OF RPP IN PAKISTAN136 MW Alstom Power Rentals:

7% Advance Payment against AdvanceBank Guarantee. Balance 93% in 36 equal

Monthly Rental Services Fee. Confirmedand irrevocable Stand By Letter of Credit

ECC approved the proposals on16.08.2006 as an emergency measure.

Subsequent to WAPDA approval,Contracts signed on 18.09.2006 withAlstom and on 23.09.2009 with GE.

NEPRA approved the Rental Tariff for thetwo projects on 15.12.2006.


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PROCEDURE FOR CCQUIRING RPPS

Advertisements in leading newspapers of the country.

Registration and issuance of Request for Proposal (RFP)

Pre-bid meeting(s)

Bid Receipts

Opening of Qualification and Technical Bids (Envelope-1)

Evaluation of Qualification and Technical Bids.

Final Notification of Responsive Bidders.

Opening of Financial and Tariff Bids (Envelope-II) of responsivebidders.

Approval of Evaluation Report by GoP. Notification of Qualified Bidders.

Issuance of LoA.

Subsequent to issuance of LoA the concerned GENCO finalizes


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RPPS TH T H VE BEEN INST LLED


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ONGOING PROJECTS


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CORRUPTION IN RPPS Favoritism in the awarding of contracts.

220 Mln scam was recorded by transparencyinternational in RPPs(Karkey).

Karkey was allowed to leave Pakistan withoutthe payment of money which it received asdown payment. It came into operation 9 monthlate then the original date adding only 60MW outof 232 MW.

Huge loss caused to national treasure byincreasing down payment from 7% to 14 % .

Extremely expensive then all other energysources.


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CORRUPTION IN RPPS Duty on the import of these machines & equipment

was completely waived off. This caused huge lossto the national treasure.

Double payment of down payment because of thesite shift in Nodairo Welfare power international.This money was later on recovered.

In 2006, WAPDA officials offered sponsors forproduction of energy illegally by breaking rules, &

national treasure had to face loss due to this. No RPP met the production efficiency requirement,

but their licenses were not cancelled.

Changes were made in the LC in terms &conditions at the eleventh hour.


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CORRUPTION IN RPP For one plant machinery was bought once

but charged twice similarly no one went

to audit the equipment imported at one of

the RPP hence the equipment was

declared faulty and new ones had to be

bought again.

ADB disapproved this projects stating

that this will result in an increase of 31-45% of electricity charges and will be

burdensome to foreign exchange

reserves but still these plants were

imported.


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VERDICT BY SC Issue was taken to SC by Faisal Saleh Hayat

&Khawaja M Asif, then SC took suo motto action

as fundamental right of people was being

violated. Chief justice along with other justice heard the

case & ordered the cancellation of contracts of

RPPsbecause of the fraud in this matter.

SC held Wapda, Genco & Pepco & financeministry responsible for loss to national treasure

because they increased down payment &

ordered them to recover the down payment &

loses with interest.


17/19

VERDICT BY SC SC held the ministers & secretaries of

the duration (2006~2008) which wereinvolved in corruption responsible &

ordered to take action against themaccording to NAB Ordinance 1999.

SC further ordered chairman NAB that allofficers which took financial benefits ,

action shall be taken against themaccording to law & a report shall besubmitted for the courts review twice amonth.


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CONCLUSION SUGGESTIONS In the light of all the facts & figures

presented above, it is evident thathuge corruption has been found in

RPP case. SC has given its verdict, now itsthe

duty of GOP to punish these corruptpeople.

Now the GOP should look forcheaper & more practicalsubstitutes for energy production &should find a long term alternative.


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Q & A

Documents

Rental Power Projects