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More delays in GE power plants a worry for Pakistan's ruling party

From Reuters - April 12, 2018

ISLAMABAD (Reuters) - A pledge by Pakistans ruling party to end electricity outages ahead of a general election in mid-2018 is being undermined by the possibility of further delays in new power plants that run on General Electrics flagship gas turbines.

State-owned gas company Pakistan LNG has been diverting liquefied natural gas (LNG) shipments earmarked for the three plants, trade and government sources said, a move suggesting doubts in parts of the government that the power plants would not be at full capacity in time for the election, likely to be held in July.

The delays come at a rocky time for GEs power business, which suffered a 45 percent drop in profit last year in part due to weak sales of new power equipment and services. GEs shares have plunged more than 50 percent in the past 12 months and the power unit is cutting 12,000 jobs, 18 percent of its workforce.

Pakistan made a big bet on the promised efficiency of GEs new flagship 9HA gas turbines as part of its solution to crippling power outages - pushing to finish three new plants in a shorter than usual time frame.

The Pakistan plants, being constructed by Chinese contractors, were together due to add 3,600 megawatts of power by January this year after the final phase of installation. Now, some officials say, they are likely to come on stream over April and May.

A senior energy official told Reuters that Pakistan had been scheduled to import 540 million cubic feet per day (mmcfd) of gas for the power plants, but that this has been slashed to about 250-300 mmcfd until around July.

A trader familiar with the situation confirmed LNG cargoes were being shipped elsewhere instead of Pakistan due to power plant delays.

The energy ministry in Islamabad did not respond to requests for comment.

Asked about the possible delays, GE did not say when the plants were likely to be fully operational. It said its role is to provide equipment to the project contractors.

GE understands the significance of the projects to help meet Pakistans growing energy demands and has repeatedly gone beyond contractually-defined obligations to support them, a GE spokesperson said.

We remain committed to helping our (contractor) customers bring the plants online as soon as possible.

ENDING LOAD SHEDDING

The Pakistan Muslim League-Nawaz (PML-N) swept to power in 2013 vowing to end power outages that have crippled most of the country, and in the past year senior PML-N politicians have frequently touted the reduction in blackouts as proof the country is on a path to increased prosperity.

Since PML-N assumed office, scheduled outages, also known as load shedding, in urban areas has sharply reduced from about 12 hours a day during peak summer demand to about a few hours last summer. This summer, the government has promised there will be no load shedding.

A key plank of PML-Ns plan to fulfill their electoral promise rests on the three major power stations.

But the delays to the three plants, all in Pakistans most populous state Punjab, have unnerved PML-N officials. Punjab is the partys power base.

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