International contractors have submitted bids for a turnkey contract to build a 350-MW oil-fired power station at Muzaffargarh, Punjab. The client is AES Pakistan Private, the local subsidiary of the US' Applied Energy Services (AES). It will finance the project along build, own and operate (BOO) lines, according to a memorandum of understanding signed with the government in late May.

The bidders are Mitsubishi Heavy Industries (MHI) with Nichimen Company, both of Japan; the Anglo-French GEC-Alsthom Group; and Japan's Marubeni Corporation with Germany's ABB Kraftwerke. An award is expected in August or early September, AES officials say.

The contract will involve carrying out basic and detailed designs, and supplying and installing the plant. Work will also include building a 132-kV substation. Transmission lines and other substations will be provided by the government's Water & Power Development Authority (WAPDA). The estimated project cost is $350 million.

The power station will use residual fuel oil to be supplied by Pakistan State Oil (PSO). According to the memorandum agreed with the government, AES will buy oil at a set, market-linked price, currently Rs 2,844 ($92.90) a tonne.

AES has approached the International Finance Corporation (IFC), the World Bank's investment arm, for possible equity participation in the scheme. Financing is expected to contain a 20 per cent equity portion and 80 per cent debt, according to the government's recommendations. AES will register a local company to manage and own the project under the name of AES Lal Pir.