KKHPP tenders: Wapda allows Power China to join in

The Water and Power Development Authority (Wapda) has reportedly allowed Power China to participate in its tenders despite terminating the contract of 128 MW Keyal Khwar Hydro Power Project (KKHPP).

Official documents and informed sources revealed to Business Recorder that Wapda issued the civil works, ie, hydro steel works of 128 MW KKHPP to M/s Sinohydro – Hajvairy JV on August 28, 2014 after competitive bidding under Public Procurement Regulatory Authority (PPRA) rules. Federal Investigation Agency (FIA) is investigating the matter.

The Auditor General of Pakistan, in its recent audit report, raised questions on the firm for not meeting the conditions of the contract.

According to sources, due to land acquisition problems and resettlement, the order to commence was issued to the contractor on August 12, 2016 establishing the contract commencement date as August 13, 2016 and the completion date May 05, 2020 under financing of KfW Germany.

The sources maintained that since then the project authorities/employer and the engineer assisted the contractor to the utmost possible extent to resolve the internal dispute of the JV Partners as well as the multiple problems and difficulties in commencement and execution of the civil and hydraulic steel works completion within stipulated construction schedule of four years.

In this context, several high-level meetings were held during past six months between head office representatives of the contractor’s JV firms, the employer and the engineer, but no positive results could be achieved.

The source said contractor during the course of fourteen months since commencement of the project, has hardly achieved any considerable milestone in project implementation and execution/implementation of works.

The engineer was issued several notices to correct in pursuance of sub-clause 15.1 of conditions of contract however Sinohydro JV still delayed and mismanaged the works. Wapda issued several warnings which are as follows: (i) contractor’s lack of highly qualified and professionals throughout the contractor’s Project Management team; (ii) serious reluctance of the Contractor’s Project Management and staff towards strict compliance with numerous contractual obligations and requirements; (iii) Contractor’s unwillingness/reluctance/inability to ensure a timely elaboration and finalization of the contractor’s numerous design and construction documentation; (iv) Contractor’s insistence in implementation of modifications to the project layout instead of implementation of the works in accordance with the Contractor’s commitments as per signed contract; (v) Contractor failed to submit the contractor’s updated Programme of the works, duly revised in accordance with the actual progress of the works/extensive delays and in strict compliance with the requirement of General Condition of Sub-Clause 8.3; and (vi) Contractor did not submit a formal statement, confirming all differences and internal disputes between the JV partners have been mutually resolved, and manually committing the continued implementation of the contract in accordance to contractor’s JV agreement.

Transparency International wrote a letter on December 10, 2020 to the relevant authorities regarding the discrepancies and favoritism toward this contractor.

Due to the non-serious and unprofessional behavior of Sinohydro JV, Wapda issued letter of termination of contract KKHPP-02 “construction of civil & hydraulic works for Keyal Khwar Hydropower Project” under General Condition of Sub-Clause 15.2.

The sources said due to inordinate delay in work by Sinohydro/Power China Group, Pakistan has faced huge loss in generation and revenue during electricity shortfall: around 2,200 GWh loss in generation and Rs 6 billion in revenue in addition to increase in cost of project by Rs 2 billion. The sources maintained that no action has been taken by Wapda, PPRA or any other agency/depart-ment against the company for not performing according to the contract.

The project Commercial and Operation Date (COD) has been delayed for more than seven years, the sources said, adding that KfW financing has expired and Wapda has again requested them for refinancing. Only for consultancy of the project an amount of euro 8.2 million has been paid.

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