Issues stymying CPEC projects remain unresolved

Energy ministry failed to implement orders given by Pak-China Steering Committee

Shahbaz Rana October 21, 2021
Third meeting of the Pak-China Relations Steering Committee reviewed the status of CPEC projects and found that a majority of its directives given in the first week of August had remained unimplemented. PHOTO: FILE


The government has once again missed its self-imposed deadlines to resolve issues hampering the progress on first-phase projects of the China-Pakistan Economic Corridor (CPEC), which may deepen mistrust among Chinese investors.

Third meeting of the Pak-China Relations Steering Committee reviewed the status of CPEC projects and found that a majority of its directives given in the first week of August had remained unimplemented.

Federal Minister for Planning, Development and Special Initiatives Asad Umar chaired the meeting.

The Ministry of Energy did not implement the orders given by the steering committee, according to people who attended the meeting on Wednesday.

In its last meeting, the government had fixed the end of August as the deadline for the Power Division to devise a policy to deal with the delay in beginning commercial operations of five CPEC power projects having generation capacity of 3,600 megawatts.

The Ministry of Energy had been directed to submit the policy to the Cabinet Committee on Energy to resolve the issue.

“The Power Division informed the committee that proposals for the extension of commercial operation date (COD) of six power projects were under process and the matter will be discussed in the upcoming meeting of CPPA board,” said a statement issued by the Ministry of Planning after the meeting.

The projects are falling far behind their dates of commissioning agreed between the government of Pakistan and Chinese investors due to overall slowdown of work on CPEC projects, Covid-related delays and strikes at some projects.

Read CPEC crown yet to shine, reveals an official assessment

In case of delay by the power producers, the project sponsors are usually under the threat of paying penalties. However, the delay is partly due to government’s policy decisions.

These power projects - 884MW Suki Kinari Hydropower Project, 720MW Karot Hydropower Project, 330MW Tel project at Thar block-II, 330MW ThalNova Thar block-II and 1,320MW Thar block-I - have been delayed.

The Suki Kinari project is facing a delay of at least 10 months; Karot project is facing delay of four months, Tel Thar project one-year delay, ThalNova project 15-month delay and Thar block-I project at least one-year delay.

Chinese investors have long been complaining about delay in resolving issues on the part of Pakistan. The 10th meeting of the CPEC Joint Cooperation Committee (JCC) had given hope that Pakistani authorities would soon start addressing those problems, however, the committee proceedings suggested that things were still moving at an unusually slow pace to the disappointment of Chinese investors.

A dispute between Sahiwal Power Plant and the Port Qasim Authority over the imported coal handling charges has remained unresolved.

As per the implementation agreement in September 2016, the PQA is charging on a minimum quantity of 3.5 million tons of imported coal but the National Electric Power Regulatory Authority (Nepra) is only adjusting 3.2 million tons of coal as a pass-through item. This has placed an additional burden on the Sahiwal power plant.

The issue to either amend the implementation agreement or allow other importers to use the idle berth space remains pending, the meeting was informed. The plant is also facing problems due to delay in power purchase payments by the government.

Read First CPEC project completed

The problems in securing visas by Chinese citizens also remained unresolved and the representative of the Ministry of Interior initially claimed that the ministry did not receive any letter in this regard.

But the issue of the Right of Way (RoW) near Karachi of 660 KV HVDC Matiari Lahore Transmission Line has been resolved and power is now being evacuated through the transmission line, according to the Ministry of Planning.

The committee was also briefed on the 880 MW Suki Kinari Hydropower Project. The Khyber-Pakhtunkhwa (K-P) government increased sales tax on construction services from 1% to 2%, which the Chinese investors said was not in line with the rates offered to other similar projects. This issue still remains pending, said the sources.

Asad Umar directed K-P government to resolve the operational issues faced by the project on priority.

Published in The Express Tribune, October 21st, 2021.

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