Power transmission line: Chinese company refuses to accept lower tariff

CPEC’s project worth $1.57b faces hurdles over tariff disagreement

ISLAMABAD: Pakistan’s first $1.57-billion high-voltage power transmission line project in the private sector has hit a stumbling block as the Chinese company working on it has refused to accept the tariff determined by the regulator, officials say.

A cooperation agreement for the project, part of priority list of the China-Pakistan Economic Corridor (CPEC), was signed in April 2015 by the National Transmission and Despatch Company and State Grid Corporation of China (SGCC).



SGCC’s subsidiary China Electric Power Equipment and Technology Company will lay the power transmission line on the build, own, operate and transfer model over a period of 27 months.

The regulator - National Electric Power Regulatory Authority (Nepra) - had set a tariff of 0.70 cent per unit for the transmission of electricity through the 878km Matiari-Lahore high-voltage direct current (HVDC) line connected to over 4,000-megawatt coal-based power projects in Sindh.

However, the tariff fell short of the expectation of the Chinese investor as it was demanding 0.914 cent per unit for a period of 25 years.

Water and Power Secretary Younus Dagha, while updating the Cabinet Committee on Energy in its meeting on August 30 about progress on the transmission line, said it would receive electricity from coal-based Engro Thar, Jamshoro, Sino Sindh Resources and Oracle power plants as well as from K2 and K3 nuclear power projects.

Dagha said the Ministry of Water and Power and the contractor had initialed different agreements covering project implementation, transmission services, land lease, operation and management. Sites for convertor stations had also been selected.

Talking about land acquisition, he told the committee that a piece of land had been acquired in Lahore while the process was under way in Matiari. Soil testing for the project had also been completed.

The secretary pointed out that the 0.70-cent per unit tariff determined by Nepra for electricity transmission was unacceptable to the Chinese investor as it was seeking 0.914 cent per unit. To accommodate the demand, the Ministry of Water and Power has prepared a review petition against the tariff, which will be sent to Nepra for consideration.

However, the secretary to prime minister was of the view that besides filing the review petition, Pakistan may approach the National Energy Administration of China to persuade it to use its office and ask the Chinese investor to agree on the lower tariff in order to avoid delay in the critical project.

Later, the cabinet committee directed that in addition to preparing the review petition, the secretary to prime minister and the water and power secretary should contact the National Energy Administration for reaching an agreement on the lower tariff.



According to officials aware of the development, the Private Power and Infrastructure Board has sent a review petition to Nepra after the Chinese company refused to accept the determined tariff.

The company, while objecting to the regulator’s decision, argued that it was required to install towers at different locations, but Nepra did not include their cost in the tariff.

Published in The Express Tribune, September 28^th, 2016.

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