ISLAMABAD, Oct 12: Pakistan has urged China to intervene and bring Shenhua Group back to the negotiating table to help revive a $1 billion project involving coal mining and setting up of a 600-megwatt power project in Thar.

Sources said that the government wanted to re-establish contact with the Chinese group before offering the project again for international bidding. The government, the sources said, had already taken a decision to set up a $500 million Thar Coal Mining Company on corporate lines with the federal government’s guarantee and the mining block earlier earmarked for the Shenhua Group could also be made part of the broader mining project.

Secretary Petroleum Ahmad Waqar told this correspondent that a delegation to China, comprising himself and adviser to the prime minister on Energy Mukhtar Ahmad, had taken up the matter with the Chinese government in September. “We really want to reactivate the project,” he said.

He said the delegation had requested the vice-chairman of the National Development Reforms Commission (NDRC) of China, equivalent to Pakistan’s Planning Commission, to bring back the company for negotiations. “We told them that we are willing to … resolve any outstanding issues,” he said. He said that NDRC’s vice-chairman had promised to get back after discussing the issue with the Shenhua Group.

Mr Waqar said that the group was the largest in China capable of simultaneously dealing with mining and power generation. He agreed that the main issue for the breakup of negotiations was a disagreement over power tariff.

“We have not been in contact with the company since long and we have made another effort to restore communications between the two sides,” the petroleum secretary said.

He said that the generation cost using imported coal was almost equal to natural gas rates of about five US cents per unit, adding that the generation price would be slightly higher, ranging between 5.5 and 6 US cents, which would again be far cheaper than oil-based power generation at 14 US cents per unit.

The 600MW coal-fired private power project had run into problems when the Economic Coordination Committee (ECC) of the cabinet approved and offered to Shenhua group 5.39 cents per unit, a tariff that was not acceptable to the Chinese firm.

He said that even President Gen Pervez Musharraf was disturbed over non-materialisation of negotiations with the firm that he himself had brought in with a lot of effort.