ISLAMABAD, Nov 8: The government is facing the problem of bridging a wide gap between Wapda and a Chinese firm over the tariff structure of the proposed 600-mw Thar Coal Power Project so that a formal Memorandum of Understanding (MOU) can be signed during Prime Minister Shaukat Aziz's visit to Beijing next month.

A meeting presided over by Water and Power Minister Liaquat Ali Jatoi here on Monday failed to sort out the tariff issue but decided to provide all infrastructure facilities to the Chinese firm without delay.

Mr Jatoi told Dawn that apart from Wapda and the Sindh government, the National Electric Power Regulatory Authority (Nepra) and Private Power and Infrastructure Board (PPIB) had been taken on board to finalize a tariff that both served the national interest and kept in view the historic friendly ties with China.

He hoped the issue would be settled within a couple of days to the satisfaction of Wapda, the Chinese firm and other stakeholders. The project would have an operational life of 25-30 years and the tariff would start coming down after an initial period of debt repayment, he said.

Informed sources said Wapda had offered a 'levelized' tariff of little over three cents per unit while the Shenhua group was not ready to provide electricity at below 5.41 cents per unit.

On the other hand, Nepra has suggested a tariff of 4.2 cents per unit and says that the tariff proposed by the Chinese firm was more than 50 per cent higher than similar gas-based projects and higher still than 5.28 cents per unit tariff of the Chashma Nuclear Power Plant.

Inside sources said the Sindh government and Wapda had been given two weeks to resolve the issue. The Sindh government had also been given one-month time to clarify certain points as desired by the Chinese group.

The question of land and water usage has been settled, the sources said. The Sindh government would not transfer the land around the project to any third party to address the Chinese company's concerns.

The provincial government has also been made responsible for the settlement of people to be displaced by the project.

The meeting directed the authorities concerned to speedily complete all formalities so that the project could start well in time.

Mr Jatoi highlighted the importance of the project, estimated to cost over one billion dollars, keeping in view the future energy requirements. He wanted all formalities completed before Prime Minister Aziz's Beijing visit. The government was committed to holding the ground-breaking ceremony in January 2005, he said.

Sindh Minister for Mines and Minerals Irfanullah Marwat briefed the meeting about the project and his recent visit to China.

Matters regarding land use right, coal mining license and use of underground water resources with the Chinese group have been finalized, he said.

There are 166 billion tons of coal reserves in Thar which are likely to increase up to 200 billion tons.