The beginning of commercial production by Lucky Cement’s 660-megawatt local coal-fired power project worth over $1 billion has faced a delay of around five months due to inability of the government to finish construction of transmission lines on time in the wake of Covid-19.
The company has, however, refused to accept excuses from government agencies responsible to build the required power transmission infrastructure.
In this regard, it has remained under contract with the authorities to launch commercial operation of the project by the middle of first quarter (Jul-Sept 2021) of fiscal year 2021-22, according to a bourse filing. Initially, the project was supposed to be operational by March 2021.
It is the first project that will begin power production on Thar’s lignite coal outside the vicinity of coalmines.
Lucky Electric Power Company Limited (LEPCL), a subsidiary of the conglomerate, is setting up the project at Bin Qasim, Karachi with estimated investment of over $1 billion.
“The company is following up with the Central Power Purchasing Agency (CPPA), National Transmission and Despatch Company (NTDC) and Private Power and Infrastructure Board (PPIB) for earliest availability of an interconnection facility,” it said in the bourse filing.
“The facility is essential to achieve the commercial operation date.”
Lucky Cement reported the matter to the Pakistan Stock Exchange (PSX) through a notification signed by its Chairman Muhammad Yunus Tabba and Chief Executive Muhammad Ali Tabba.
Based on the current level of NTDC readiness for providing the interconnection facility and government’s eagerness to extend necessary support to the power purchaser in this respect, “it appears that the project may achieve commercial operation by the middle of first quarter of FY22.”
“The company, in consultation with its legal counsel, has not accepted CPPA’s other force majeure event (Covid-19) claim,” the notification said.
“This is because delay in interconnection work comes under the ambit of concurrent delay as per power purchase agreement due to NTDC’s inability to resolve the right of way issues with Port Qasim Authority, Fauji Oil Terminal and Distribution Company Limited, Pakistan Steel and Sindh Board of Revenue.”
The CPPA, based on FME (force majeure event) notice received by it from NTDC, notified the company about FME through its letter dated March 25, 2020, stating therein that “Covid-19 outbreak has caused a complete halt to transmission planning, designing, engineering, project development and execution of interconnection works.”
Subsequently, the CPPA notified the cessation of other force majeure event (OFME) vide its letter dated October 16, 2020.
“In the said notice, it was also intimated that interconnection-related activities have recommenced from October 1, 2020 while the period till September 30, 2020 shall be treated as excused,” it said. The company, in consultation with its legal counsel, has not accepted the CPPA’s OFME claim, it stated.