In 1998, Nawaz Sharif’s Federal Minster for Water & Power told the National Assembly that the 1320 MW (originally 5280 MW) Keti Bander project in Sindh had been abandoned with the consent of the foreign sponsors, Consolidated Electric Power Asia.
He provided following reasons for the cancellation of the thermal power project:
- No physical and real construction work had started at the site.
- The electricity generated would be too expensive. It would cost Rs 4 per unit at the generation site and Rs 8-12 at consumers end.
- CEPA intended to import coal instead of utilizing deposits in Thar.
- Surplus electricity is available in the country for the future use.
- CEPA was asking the WAPDA & PPIB to build a transmission line instead of doing the same itself.
On the very next day, CEPA owned by the Gordon Wu of Hong Kong denied the allegations made by the federal minister.
CEPA termed the statement of federal minister as baseless and ineffectual. CEPA made it known through its finance manager that they had not been consulted on the question of termination, that no decision had been conveyed to them and that CEPA’s efforts to have a meeting with the PM proved fruitless.
The composite billion dollars Keti Bander project had four components:
- A 5280 MW electric plant.
- A deep sea port (at a distance of 148 km from Karachi).
- An industrial zone between Thatta and Jamshoro.
- Thar coal field development.
- Job opportunities for 7000 indigenous people of Sindh.
The formal agreement of Keti Bander project was signed on August 3, 1995 between the CEPA and the Government of Pakistan, and after eleven weeks on October 27, 1995 another agreement regarding the purchase of electricity from CEPA was signed.
It was decided that the project will be completed in 2001 and its electric power plant will be composed of eight units. Each unit would produce 660 MW, and the first two units will use imported coal (probably from Indonesia) for the production of 1320 MW electricity while for the remaining six units indigenous Thar coal will be used.
The ground breaking ceremony of the project was performed on January 30, 1996 and the people of Sindh, particularly of Thar and Thatta had high hopes that with this project will open the doors of opportunities, development and prosperity for them and rapid industrialization and modernization would take place in rural Sindh. The business and economic community also welcomed it because establishment of third deep sea port would provide significant opportunities to import and export business.
The agreement of co-operation between Sindh and CEPA was signed on April 25, 1996 and the initial work of geological and soil survey was started by the CEPA with the help of Geo Engineering Management Services.
CEPA also purchased a 3000 acre piece of land at the cost of Rs 90 million and deposited $ five million in the joint account of Sindh Government and CEPA.
It was stipulated in the implementation agreement that WAPDA and PPIB (private power infrastructure board) will lay double circuit 500 KW transmission line between Keti Bander and Jamshoro (185 km) before December 31, 1996. But they did not even complete the initial tender work of the transmission line.
On May 1, CEPA wrote a letter to the federal minister of water & power requesting for the provision of transmission line but could not get any response. It then sent another letter to finance minister on 5th but no response was received. Finally on the 24th, the Nawaz Sharif government announced the termination of the project and a wave of resentment and a deep sense of shock were created in Sindh.
The question that is being asked among the Sindhis is as to why such a multi dimensional and most beneficial project was cancelled by Nawaz Sharif since investment was entirely private and did not involve any governmental funds. The Sindhis regard this as a biased decision and an act of discrimination and victimization against them.
It appears that WAPDA and pro Kalabagh dam lobby was responsible for this termination. This lobby activated itself with a task of not letting the huge reservoirs of the Thar coal to be used in power plant, so that instead of thermal power hydel power gets the priority and ultimately Kalabagh dam appears as a single major possibility for the future energy requirements. For this purpose no allocation was made for Sindh Coal Authority in the budget of 1997-98.
The claim of availability of surplus power in the country is for all to see. According to the World Bank, Pakistan has to produce 1600 MW each year after 2001 and even 19 existing projects (mostly proposed to be set up in Punjab) including units of CEPA cannot fulfill the required power demand of the country.
As for as the cost of electricity is concerned, CEPA has rebutted the assertion that the electric unit generated by the Ketibander power project would cost Rs 4.5 per unit (11 cents) and has clarified that according to the agreement the company will sell the electric unit at the rate of Rs 2.27 (5.57-6.1 cents) to the Sindh government which would cost less than HUBCO and KAPCO plants and even less than the existing rates being charged by WAPDA. It is the cheapest private power rate in the region.
The principle of honoring of contractual obligations is also involved in this case. A successor government is not free to cancel a contract signed by its predecessor arbitrarily or on flimsy grounds.
In view of the above, it is evident that no default was committed by the CEPA and all the statements and arguments of the federal govt regarding Ketibander project are baseless. Successful completion of this project is essential for Sindh as well as for the nation as a whole.