Power production: ECC approves transmission line from AJK to Punjab

Committee set up to oversee import of LNG from Qatar

Shahbaz Rana August 16, 2014


The Economic Coordination Committee on Friday approved Rs17 billion in sovereign guarantees for laying down a transmission line to transport 969 megawatts electricity from Azad Kashmir to central Punjab and constituted a committee to negotiate a gas import deal with Qatar.

The meeting was chaired by Finance Minister Ishaq Dar and the ECC approved, in principle, to extend sovereign guarantee against financing facility of Rs17 billion from local banks for implementation of 500KV double circuit transmission line from Neelum-Jhelum Hydro Power Plant to Gujranwala, according to the ministry of finance. The guarantees would be subject to approval of terms and conditions of borrowing by the ministry of finance, it added.

The project has a total cost of Rs22.6 billion including a Rs13.6 billion foreign exchange component. Prime Minister Nawaz Sharif has directed that the first unit of 969 MW Neelum Jhelum Hydro Power Project must be operational by December 2015. Before that, the National Transmission and Dispatch Company Limited (NTDCL) must complete the priority portion of the transmission line by September 30, 2015.

As NTDCL is implementing the project through its own resources, local banks have shown their willingness to provide funding against sovereign guarantee by the GOP.

The ECC chairman formed a committee under Minister for Planning and Development Ahsan Iqbal to expedite work on the National Energy Plan and to submit its report within two months.

LNG import project

The ECC constituted a nine-member Price Negotiation Committee for the import of Liquefied Natural Gas from Qatar. The ECC approved the summary after excluding Secretary Law or his nominee from the nine-member committee as they may become stakeholders in the process and be replaced by any legal firm for input on legal issues in order to maintain the transparency of the project.

The government had initially announced that the first LNG consignment would be in by end of this calendar year – a deadline that it would miss due to a delay in the finalisation of LNG service terminal contract in addition to a delay in the finalisation of a gas import deal.

Committee members include Secretary Petroleum and Natural Resources as chairman, Chairman Board of Investment, Secretary Finance, a legal consultant,  Secretary Water & Power, Managing Director (MD) PSO, MD SNGPL, MD SSGCL and MD Inter State Gas System Limited.

The move to constitute the committee is aimed at shifting the responsibility of price negotiations to all ministries concerned, which will either be involved in importing LNG from Qatar, making payments and utilising it in power plants.

The petroleum ministry wanted to include representatives of the finance ministry in the face of major challenges like negotiating a contract with consultants and arranging three-month letters of credit amounting to around $800 million. Though initial discussions had been held with Qatar on gas import, the price would be negotiated after the two sides agreed on operational and commercial terms, they said.

PSO and Qatargas have been nominated by their respective governments to negotiate the draft of the Heads of Agreement (HOA) – a non-binding document outlining the main issues relevant to a tentative partnership agreement. It represents the first step on the path to a full legally binding agreement.

The finance minister was informed that the committee headed by Minister for Water and Power Khawaja Asif has prepared a draft of the auto industry policy.

The finance minister on a briefing to ECC on incidental and financial cost of imported urea directed that adequate gas supply should be made available to the domestic fertilizer companies for utilizing the maximum production capacities of the national fertiliser manufacturers.

Published in The Express Tribune, August 16th,2014.

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