Dr Arif Alvi asked a question in the National Assembly. After a long delays it was answered and the blame was put on problems with the national grid by DHA. How convenient. The real scam still seems to be hidden and there is no knowledge of who is responsible in the decision making. Those who must have benefitted in this deal are long gone leaving DHA residents to suffer a serious water shortage. Criminal.
Question and Oral Answer given on 24 Feb 2014 page 1, question # 66 (can be seen on NA website)
The Minister of Defense may be pleased to state:
a) The reasons for failure of the DHA Cogeneration Power Plant that was supposed to generate 94 MW of electricity and supply 3 million gallons of water daily?
b) For how long did it run after its inauguration in December 2008?
c) How much money was spent on this project?
d) Who are responsible for this failure and whether any action was taken against them?
Answer given on 24/2/2014
Minister for Defence: (a) M/s SACODEN (major share holder) sponsored the Cogen Plant through an SPV (DCL) registered with SECP and represented by Mr. Haseeb Khan. M/s SIEMENS represented by Mr. Sohail Wajahat Siddiqui installed the plant. M/s AEI (Ashmore Energy international) represented by Mr. Khalid Nasir changed hands with M/s SACODEN and became the owners. Cogeneration Plant suffered an excessive vibration due to sudden frequency drop in National Grid in 2010. It damaged the vans and blades of the turbine. Resultantly the Plant stopped.
However, Desalination Plant is in workable condition and the Generation Plant requires repairs.
(b) Plant performed for 11 months and can be made operational after repairs.
(c) Out of investment of about Rs. 7 Billion. DHA’s share is only Rs. 271 Million which is not public money. On default by the corporate entity, the loan providing Banks have taken over the plant on 31 October 2013.
(d) The owner of Plant is not DHA. DHA is only a minor share holder of 8.1% DHA is putting in its effort alongwith coordination at various tiers for repair of Plant Presently Bankers Consortium (including UBL HBL & Faisal Bank with share, holding as 20.99%. 19.87% and 19.10% respectively) alongwith other minor share holders (list attached as Annex-A) are the owners of the plant. To carry out the enquiry and Hold people responsible for disciplinary action of any private limited company registered in SECP does not fall under the scope and mandate of DHA. Involvement of DHA in the Plant is as follows:—
- (i) Award of rental lease of land for the plant.
- (ii) Minor share holding.
What is the Reality
The plant with the help of Natural Gas (Gas Purchase Agreement was finalised) would generate 110 MW of electricity and would have produced 3 MGD (DHA gets only 6-7 MGD these days. The DHA Cogen Ltd. is a public sector company incorporated in Karachi on Jan 19, 2003 was a JV between DHA and Sacoden Investments of Singapore. Their board of directors had DHA representation on 2 to 4 basis with one member from Faisal Bank.
DHA states in the answer above that the money it invested is not public money which by itself is a very wrong statement. Whose money does DHA hold, if it is not public money? The project used old and already repaired products and Siemens refused to repair many of the parts of the plant on the grounds that it didn’t qualify for the warranty.
The plant installation had major flaws as just after its test run it started showing problem of siltation. It was poorly planned and to get through with the proposal, it was hyped a lot. The DHA has taken a very safe way out blaming problems with the national grid. It can still be salvaged but first those who made such a wrong decision must be punished also those who are involved in corruption. DHA has not come clean yet.
Dr Arif Alvi