ISLAMABAD: The government`s ambitious plan to auction old and defunct public sector generation plants under Genco Holding Company Limited (GHCL) aimed at curtailing operation and maintenance (O&M) expenditure is in serious trouble, compelling authorities to consider handing over the scrap to Wah Industries of the Ministry of Defence.

Sources said the first round of auction, which appeared to be a success on the sale counter, could not generate any proceeds so far in almost four months amid management`s inability to secure binding contracts while the second round failed to take off even on the scheduled bidding date.

`Frustrated by repeated failures and lack of credible bids in subsequent auctions, the Energy Task Force led by Lt Gen Zafar Iqbal decided earlier this month to make a major policy shift and hand over all remaining power plants to Wah Industries through a government-to-government (G2G) arrangement by the end of the current month`, said the sources.

Last year, the government had decided to close down old, redundant and defunct public-sector Genco plants and auction their obsolete machinery and equipment (excluding land) via an open internationalbiddingprocess.

The Task Force on Energy Reforms that was holding separate negotiations with Independent Power Producers (IPPs) gave the GHCL management three-month target for the auction and close of transaction. On March 18, the first phase of nine old power plants was put up for auction through open bidding.

Only seven plants received qualified bids amounting Rs9.05bn against a reserve price of Rs8.07bn.

However, no international bidder participated in the bidding process. As per the contract requirements, the bidmoney was must to be paid either 100pc in advance or through four installments within three months.

Among the seven awarded plants, six contracts were bagged by M/S Daraza Builders while the contract for the 20MW Multan Cantt plant was awarded to M/S Malik Bashir Traders.

At the 147MW Kotri Power Plant, Genco-I or JPCL signed a contract worth Rs1.88bn with M/S Daraza, which deposited the required 10pc performance guarantee but no further payment has been received to date. Surprisingly, Genco-1 top management did not issue any delay notices or invoke interest penalties despite clear contractual clauses.

Genco-II (CPGCL) returned a bid security of over Rs96m to M/S Daraza for the 50MW Sukkur Plant without contract finalisation.

At the 57.2 MW Quetta Power Plant, a second-phase bid of Rs601m was submitted by Perfect Tel Company. Payment delays continue, allegedly with the tacit support of Genco-II (CPGCL) and GHCL top brass.

Procedural lapses have also been reported in Genco-III (NPGCL) whose management is internally under scrutiny for delaying contracts of key plants. For example, contract for TPS Multan Cantt plant (20MW) was signed in June 2025 with M/S Malik Bashir Traders three months after the auction, raising concerns over NPGCL`s intent.

Contracts for NGPS Multan (260MW) and GTPS Shahdara (85MW), both awarded to M/S Daraza, are only now being signed with delays of over 3.5 months. Contract for GTPS Faisalabad (247 MW) remains unsigned amid speculations of interest-based gains.

Meanwhile, LPGCL (Genco-IV) signed a Rs2.133bn contract with M/S Daraza for the Lakhra Power Plant in May 2025. Although the first installment was paid, the second was delayed by 18 days.