Mega power project to be awarded to Chinese company

MUSHTAQ GHUMMAN

ISLAMABAD:The government is all set to award 600KV (4,000MW) HVDC (High Voltage Direct Current) 878-kilometres Matiari-Lahore Transmission Line Project of $2.1 billion to China Electric Power Equipment & Technology Co Ltd (CET) at wheeling tariff of 0.74 cents per unit without evaluation of its technical and financial evaluation, as the project is part of CPEC, well informed sources told Business Recorder.

The government of Pakistan had announced the policy framework for private sector transmission projects in 2015 to attract private sector investment for augmentation of transmission network in the country to transmit electricity from the upcoming power projects.

Giving the background, the sources said that National Transmission and Despatch Company Limited (NTDC) and State Grid Corporation of China (SGCC) entered into a co-operation agreement on April 20, 2015 for implementation of (i) Matiari-Lahore Transmission and Transformation Project; (ii) and Matiari/Port Qasim-Faisalabad Transmission and Transformation Project shall be implemented under agreement on China-Pakistan Economic Corridor between China and Pakistan and the Transmission Line Policy 2015. Under the agreement, SSGC has nominated its subsidiary ie China Electric Power Equipment & Technology Co. Ltd (CET) to develop the transmission line projects on BOOT model and it has also been agreed that CET would also be the EPC contractor for transmission projects.

The third meeting of Energy Working Group for CPEC was held on August 25, 2015 wherein it was also discussed that in order to meet the power transmission demand of a number of power source projects planned in the energy planning of CPEC, the Matiari-Lahore and Matiari-Faisalabad transmission line projects are propose to be undertaken by State Grid. During the 5th Joint Co-operation Committee on CPEC, held on November 12, 2015, it was agreed to encourage State Grid to negotiate with Ministry of Water and Power and NTDCL and apply for tariff to Nepra as soon as possible. These transmission projects had also been included in the revised list of prioritised projects.

Under the directions of Ministry of Water and Power, PPIB being one window facilitator and a co-ordination agency on behalf of government departments under Transmission Line Policy 2015 and PPIB Act 2012, filed tariff petition to Nepra on the basis of information/ documentation provided by the NTDCL and CET on February 8, 2016 for the project and Nepra determined reference tariff for the project on August 18, 2016. However, CET in its letter of August 27, 2016 requested PPIB to file Motion for Leave for Review as the tariff and cost allowed by the Authority were unacceptable to CET. Subsequently, upon directives of the Ministry of Water and Power, PPIB filed Motion for Leave for Review to Nepra on September 2, 2016 upon which Nepra has given decision on November 24, 2016. Now SGCC/ CET is required to apply for registration with PPIB.

Nonetheless the Transmission Line Policy 2015 provides two modes for processing of private transmission projects; International Competitive Bidding (ICB) mode and upfront tariff mode. However, Nepra, has determined a project specific tariff and specified that tariff would be applicable to the qualified independent transmission company as declared by PPIB. Furthermore, the Nepra has directed that upon issuance of LoI/ LoS to the relevant Special Purpose Transmission Company (SPTC) by the relevant agency, the SPTC shall be required to approach Nepra for the grant of Special Purpose Transmission Licence along with a request for the approval of tariff as per relevant provisions of Nepra Act, Rules and Regulations.

According to the Ministry of Water and Power, since the project falls under the Government- to- Government (G to G) projects category whereas there is no provision under the Transmission Line Policy 2015 for processing of such projects. However, Public Procurement Regulatory Authority (PPRA) Rule 5 states: "Whenever these rules are in conflict with an obligation or commitment of the Federal Government arising out of an international treaty or agreement with State of States or any international financial institution, the provision of such international treaty or agreement shall prevail to the extent of such conflict." Furthermore, as per Public Procurement Regulations of July 18, 2011, if Rule-5 of PPRA is to be invoked in case of international/ inter-governmental commitments, the matter after due consultations be referred to the ECC.

The Ministry of Water and Power, sources said, has placed the following recommendations for consideration and approval of the ECC; (i) authorising the Ministry of Water and Power/ PPIB to proceed in terms of Rule 5 of Public Procurement Rules 2004 to process 600 KV( 4000 MW) HVDC Matiari-Lahore Transmission Line Project( along with grid, Converter stations/ grounding/electrode stations at both ends) to SGCC/ CET subject to their unconditional acceptance of Nepra's approved tariff for the project and fulfilment of other applicable provisions of Transmission Line Policy 2015 without evaluation of technical and financial credentials of the sponsors on the basis of fact that the project has been conceived and awarded under CPEC; (ii) and PPIB to adopt same procedures for further processing of the project as stipulated under upfront tariff mode under provision of Transmission Line Policy 2015 except any provision which is in contradiction to the policy for projects under CEPC.

The ECC is expected to approve the proposal in its forthcoming meeting likely to be held on Monday (today) or tomorrow (Tuesday).

An official on condition of anonymity told Business Recorder that most of the tariff related issues, etc, have been settled and it is hoped that project would be awarded to the Chinese company this week.

Unconfirmed sources told Business Recorder that the Chinese company has sought some additional amount for converter stations which the PPIB has agreed upon. In this regard a letter has been written to Nepra for inclusion of additional amount of converters in the tariff.