PAKISTAN: Green light for second private power station

25 March 1994

The turnkey contract awarded to Italy's Ansaldo Energia to build a 350- MW oil-fired power station at Khalifa point, Baluchistan province, was to have been signed on 20 March (MEED 4:2:94).

The client, the local Fauji Electric Power Company (Fepco), has negotiated a draft agreement with the government covering the crucial fuel purchase and power sale arrangements.

Ansaldo will engineer, supply and install the plant close to the first private power project now under construction at Hub river. It is likely to award subcontracts to local companies for the civil works.

The speed of the negotiations between Fepco and the government contrasts with the protracted talks about the Hub river scheme. Fepco and its negotiating partners are using the pricing formula agreed for the Hub river scheme as the basis for their talks.

Fuel for the power plant will be provided by Pakistan State Oil through the same pipeline it is building to the Hub river project site. The Water & Power Development Authority will buy the generated power for distribution through its grid.

Work on the power station is to start as soon as financing arrangements are made and will last 39 months.

The sponsors, the local Fauji Foundation and Hong Kong-registered Canamerican, will finance between 20 and 25 per cent of the project cost in equity. Other financing is to come from multilateral lending institutions and commercial banks. The UK's Commonwealth Development Corporation and the Manila-based Asian Development Bank are considering taking a small stake. The World Bank may guarantee commercial loans against political risk, in an arrangement similar to the Hub power project.

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