Private Power Generation Feasibility Studies
K&M was contracted by the World Bank to review and prepare an outline for privately funded power generation projects in Pakistan. K&M evaluated the following projects: 1) 4×323 MW, oil-fired station, 2) 3×340 coal-fired station, 3) lignite-fired multi-unit station with fluidized bed combustion, and 4) hydroelectric station. K&M also assisted the World Bank in the preparation of cost estimates for these projects.
K&M was the technical advisor and consulting engineer to KTI Energy and Resources Services, Inc., for a 5 million gallon per day water desalination plant and municipal waste-to-energy facility capable of generating 40 MW (net) for sale to the grid to be completed for the Defense Housing Authority in Karachi. This project was offered on a build-own-operate basis. The scope of services for the contract included the following: obtaining USAID/TDP grant-in-aid for the feasibility study, developing of the Preliminary Feasibility Report, assisting the client and its agents in conducting negotiations in Pakistan for power purchase and water supply agreements, assembling the financial package, participating in the development of the procurement documents, serving as the Owner’s Engineer for construction contract negotiations and construction and start-up period.
K&M was retained as Lender’s Engineer by the National Development Finance Corporation of Pakistan (NDFC) on behalf of the project lenders for the Raiwind Power Project as part of NDFC’s due diligence review. The project sponsors formed SEPCOL as a limited company incorporated in Pakistan to implement the US$138 million 117 MW (gross) power plant near Raiwind. The Water and Power Development Authority (WAPDA), a Government owned utility, will purchase all the project’s capacity under a 22 year take or pay Power Purchase Agreement (PPA). K&M’s independent review was carried out in four weeks. This short period was required to meet the intended project schedule for financial close.
K&M served as primary consulting engineers for this due diligence assignment. K&M was responsible for a complete technical and financial review of a 100 MW independent private power project (captive plant) in Pakistan. The review was to determine the technical feasibility and commercial application of the medium-speed diesel engines, fueled by heavy-fuel oil. K&M conducted performance review of the project and evaluated the engines, site conditions and fuel requirements of the facility. Further technical issues reviewed included emissions and environmental concerns for securing financing, capital and O&M cost analysis, and the projected performance record of this type of plant for feasibility of commercial operation.
As Owner’s Engineer for the project developer, Habibullah-Coastal Power Company, K&M had overall responsibility for managing, inspecting and accepting technical and engineering work in the design and construction of the 140 MW Quetta combined-cycle plant using three GE LM6000 turbines. K&M’s services comprised a complete range of technical assistance representing the developer’s interest in the project’s design, engineering and construction, and continued these services through to the commissioning and start-up of the facility.
Initiated in the late-1980s, the Hub Power Project was the largest private power project in the developing world to reach financial close. Structured on a Build-Own-Operate (BOO) basis, the transaction secured, for the first time ever, World Bank financing of a private infrastructure project. K&M served in a variety of roles as the project progressed from inception to commercial operation. The project consortium consisted of Xenel Industries of Saudi Arabia, National Power of the United Kingdom, Mitsui & Co. of Japan, Ishikawajima-Harima Heavy Industries of Japan, and K&M Engineering and Consulting Corporation of the United States. The project consisted of two phases. In Phase I as Privatization and Institutional Reform advisors, K&M played a critical role assisting the Government of Pakistan to address the legal, regulatory and financial reforms that established the institutional framework required for project implementation. In Phase II as Project Structuring and Development advisors, K&M’s was one of the initial architects of the transaction.
K&M’s project structuring strategies and risk mitigation techniques were instrumental in attracting private investment and achieving financial close. K&M led the negotiations between the Government of Pakistan, World Bank and consortium of bilateral lenders and commercial banks that resulted in $1.6 billion in funding. K&M managed each aspect of project development which included structuring the Security Package, preparing the International Competitive Bid documents for securing the EPC construction consortium as well as tendering and evaluating bids.
K&M was serving as Lender’s Engineer to the Australia New Zealand International Merchant Banking Group (ANZ) on behalf of the project lenders for the 412 MW residual fuel oil-fired combined-cycle Rousch power plant located at Sidhnai Barrage near Multan. K&M initially conducted an independent engineer’s review of the project as part of the lender’s due diligence. The project was structured as an IPP. K&M reviewed all technical and commercial aspects of the project including design, costs and schedules, as well as all major project agreements. Subsequently, K&M provided periodic inspection and construction monitoring on behalf of the project lenders, providing Independent Engineer’s certificates verifying progress, completion and satisfaction with the work.
The International Finance Corporation (IFC) served as the Lead Financial Advisor to the Privatization Commission in Pakistan for the privatization of the Jamshoro Power Company Limited (JPCL). The IFC engaged K&M as the Lead Technical Advisor to support the entire transaction process. K&M’s first task was to perform a full technical and commercial due diligence of JPLC’s existing power generation assets, which consist of one HFO-fired steam unit, three dual-fuel HFO/gas-fired units, and nine gas-fired units totaling 1,054 MW of combined capacity across the Jamshoro and Kotri power stations. K&M staff also performed site visits, estimated the value of the existing assets, evaluated CAPEX needs for refurbishment, and assessed the scope for operational improvements to the assets. The due diligence also included an analysis of the JPLC tariff structure and of the Pakistani power market.
The World Bank engaged K&M to lead a two-day, interactive training seminar at the World Bank’s office in Washington, DC, for members of the Privatization Commission of Pakistan and interested stakeholders from the private sector and the World Bank Group. The Privatization Commission is responsible for implementing Pakistan’s new, cross-sectoral, nation-wide privatization program to sell Government-owned infrastructure assets and companies to the private sector. The program’s scope includes power generation and distribution, telecommunications, banking, and a number of other sectors such as heavy industries and manufacturing.