Horizon Energy wholly- owned subsidiary of the National Fuel Gas Company of the US. has announced that it is withdrawing from the development of a 151-MW power project at Kabirwala, near Lahore. Sceptre Power, also of the US, may also drop out, industry sources say.
The project was being developed by the local Fauji Kabirwala Power Company (FKPC), with equity participation also coming from the local Fauji Foundation, and Intrag of the US. The three US companies had joined together to form KPP Investment, which was expected to take an equity stake worth $18 million, the majority of which would be accounted for by Horizon. according to financial commitments made earlier this year. The Fauji Foundation was to provide a stake worth just over $19 million and the Asian Development Bank (ADB) had committed itself to a stake of 5.3 million. ADB and the Export Development Corporation of Canada have also signed agreements for debt financing totalling $132 million.
Bruce Hale, vice-presidert of Horizon, said that the decision to withdraw from the project was 'based upon our conviction that the documentation required for a timely construction start cannot be accomplished in the time remaining.' Hale added that the project has made good progress, but that a large amount of issues, including financial matters, remained unresolved.
FKPC says that it has not received official confirmation that Horizon will withdraw from the project, and that talks are due to be held in the US during the second week of September. The company maintains that the project will go ahead and if necessary the Fauji Foundation will increase its equity stake. FKPC a Ided that it is confident that documentation will be finalised in time for the planned 30 September groundbreaking ceremony.
The plant will use the indigenous supply of low British thermal unit (BTU) gas.
National Energy Production Corporation of the US will provide engineering, design construction, start-up and testing services.
Completion was originally scheduled for 1998 (MEED 7:6:96).
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