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ISLAMABAD: The government has sought a special tariff for 878km Matiari-Lahore transmission line to be built by a Chinese firm at a cost of $2.1 billion to evacuate upcoming 4,950 megawatts of electricity from coal-based power plants at Thar, Hub and Port Qasim.

This is the first transmission line project in the private sector.

Interestingly, however, the tariff petition for laying the transmission line on a build, own, operate and transfer (BOOT) basis by the Chinese firm State Grid of China/China Electric Power Equipment and Technology Co Ltd (CET) has been filed by the Private Power and Infrastructure Board (PPIB) on behalf of the National Trans­mission and Despatch Company (NTDC), a state-owned entity registered under the company laws.

Based on engineering procurement and construction (EPC) cost of $1.76 billion and other cost build-ups total $2.1bn, the PPIB has requested National Electric Power Regulatory Authority (Nepra) to approve a transmission tariff of 95 paisas (0.914 cents) per unit (kWh) for 30-year life of the transmission line. It will involve 80:20 per cent debt-equity ratio.

Informed sources said the NTDC which operates over 14,000km of transmission system of various capacities had previously applied for the tariff that was rejected by Nepra for technical and legal reasons.

The tariff petition has been prepared purely on the basis of “financial and technical data received from the CET. The project will be transferred to NTDC on completion of 25 years.

It said the NTDC and Chinese firms had signed cooperation agreement for two similar transmission lines. Apart from Lahore-Matiari, the other project included 660kv High Voltage Direct Current (HVDC) transmission line from Port Qasim to Faisalabad with 4,000MW capacity but that is not part of this petition.

The PPIB said the NTDC and State Grid of China (SGCC)/CET signed cooperation agreement in April 2015 for the development of about 660kv HVDC for Matiari-Lahore transmission line of 878km for wheeling 4,000MW generation in southern part of the country to mid country load centres. It is included in China-Pakistan Economic Corridor (CPEC) priority projects.

However, due to constraints on public sector resources and borrowing capacity of NTDC, the government had announced a policy framework for transmission line development in the private sector. “The induction of private sector in the transmission line would result in capacity additions in the system and bring about stability, reliability and sustainability”.

The transmission line would have the maximum capacity of transmitting 4,000MW from generation capacity of about 4,950MW from 660MW Engro Thar Coal plants, 1,320MW of SSRL Thar Coal, 1,320MW of Port Qasim project, 660MW each of two Hub Coal Power plants and 330MW of Siddique Sons Energy.

The petition said the NTDC had opted for HVDC 660kv line for the bulk power transfer through a long distance line on the basis of feasibility and cost studies through SNC-Lavalin of Canada in 2013. Two converter stations at Matiari in Sindh and Lahore will also be part of this project to interface with the existing transmission system.

The PPIB said the transmission line would pass through mostly rural land away from settlements and obstruction with least temporary loss to crops and trees to be properly compensated. It said the Chinese investor had been involved in the project because “currently there exist a number of lengthy, time and money consuming complicated procedures due to which private investors are problem-stricken” like provision of bank guarantees, finalisation of project agreement with multitude of government agencies.

Moreover, the project was associated with power generation plants on imported and local coal at low operating costs that would save billions of dollars annually that would otherwise be needed for import of oil for equivalent electricity generation.

The project will take 36-42 months to be developed in parallel with power generation plants at Thar, Hub and Port Qasim and would be ready to evacuate power from those plants.

Published in Dawn, March 10th, 2016