AHMAD AHMADANI ISLAMABAD - The idea of floating and implementing the Rental Power Plants (RPPs) has badly failed as after spending multi-millions on account of advance payments to the sellers of rental projects, PEPCO could add only 62MW in the system against the target of 2700MW. Rental Power Plants (RPPs) to reduce the loadshedding by December 31, 2009 was not achieved. Out of fifteen contracts, nine RPPs became effective but only one RPP achieved Commercial Operation Date (COD) so far. The idea of floating and implementing the RPPs was badly defeated, Auditor General of Pakistan concluded in its Audit report on the accounts of Water and Power Development Authority Audit Year 2010-11 It was observed that after spending Rs 16,603.438million on accounts of advance payments to the seller of rental projects, Pakistan Electric Power Company (PEPCO) could only add 62MW in the system against the target of 2,700MW. Besides the government has created a liability of $1,709million which will be payable as rental charges to the RPPs on delivery of energy. Out of fifteen contracts of Rental Power Plants (RPPs) so far signed, nine contracts of RPPs became effective and from them six contracts could not achieve commercial operation date (COD), six contracts were dropped due to non-fulfillment of contractual conditions and one contract was signed off subsequently case is under mediation and one contract partially (60MW) fulfilled the contractual conditions but remaining 90MW was not achieved. Again, out of nine, COD of one contract is yet to be fixed, the report added. It is observed that proper feasibility study was not carried out before launching of RPPs with the result that PEPCO had to face technical as well as financial problems during award/ execution of rental power plants ie type of technology, selection of site, inter-connection arrangements, minimum thermal efficiency, used life of the plant, minimum operation hours run and cash flow position. Resultantly RPPs have failed to start improperly planned and a step made in haste. Quoting the causes of failure of RPPs, the report said cost of rental charges per Kilo Watt Hour (KWH) was not worked out before launching RPPs. Pre-qualification of the sellers was not carried out. Minimum thermal efficiency of the power plant was not fixed. Frequent extension in COD was granted to the sellers. Lack of coordination among the stakeholders ie PEPCO, GENCO and Ministry of Water and Power. Change of technology was allowed which caused delay to achieve the COD. Very old plants having low thermal efficiency were installed. This has increased tariff of fuel cost component by 20 per cent as per NEPRAs decision. ECC decisions were not implemented. PPRAs Rules were not followed. No cost analysis was prepared in respect of used thermal power plants, type of thermal technology and their efficiency before inviting tenders for RPPs. It is worth mentioning here that AGP report while giving recommendations has said action needs to be taken to cancel the contracts, which have become void and recover the advances with interest and avoid acceptance of partial COD. Investigate and fix responsibility for change of machinery of the RPPs after signing the contract and recover the amount of contractual penalties from the sellers. Fix responsibility, for not carrying out pre-qualification of sellers, for not fixing of minimum thermal efficiencies of power plants, for extension of COD, for installation of old plants having low thermal efficiency and for changing of technology that caused delay in achieving COD. Implement ECC and Cabinets decision in letter and spirit and bring the existing generation capacity at par with the installed capacity in all existing thermal plants.