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Nepra issues licence for Matiari-Lahore line

Updated February 22, 2018

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Transmission lines are crucial to carry the additional power from the projects under implementation to the final consumer. Unlike these lines, the Matiari line will be the first high voltage direct current line in the country.
Transmission lines are crucial to carry the additional power from the projects under implementation to the final consumer. Unlike these lines, the Matiari line will be the first high voltage direct current line in the country.

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday granted a 25-year special purpose transmission licence to Pak Matiari-Lahore Transmission Company Ltd (PMLTCPL) — a company owned by three Chinese firms — for the construction of 878-kilometre line.

The special purpose vehicle (SPV) company PMLTCPL will be owned by two Hong Kong-based companies: Zhong Cheng Xin International Ltd holding a stake of 69.98 per cent and Zhong Zhuo Ye International Ltd 30pc.

Both the companies are wholly owned by State Grid International Engineering Ltd, a 100pc subsidiary of China Electric Power Equipment and Technical Company (CET) which in turn is 100pc owned by State Grid Cooperation of China (SGCC).

The SPV will be required to achieve commercial operation date (COD) of the transmission line by March 1, 2021 and will be empowered under the licence to run it for 25 years. The project is expected to be completed at a cost of $2.1 billion. The government is extending a series of tax concessions to the project.

Nepra said it issued the licence after consultations with all the relevant stakeholders to ensure that more than 4,000 megawatts of electricity to be produced in south of the country could be transported to the north, mostly the Punjab-based load centres and was satisfied with the credentials of the contractors.

The CET has carried out major transmission line projects in Ethiopia, China, Pakistan and Myanmar etc and had very rich experience as engineering, procurement and construction (EPC) contractor in construction of similar projects.

Regarding the financial health of the company, Nepra said the SPV had been incorporated in September 2015 and did not have any substantial assets as there was no significant activity of the project. It said the CET which will be working as EPC contractor had a total assets of $1.97bn. Also based on financial health of the sponsors, various Chinese banks (HSBC, UOB and CMBCL) had expressed their interest to finance the debt of the project.

Moreover, the regulator said the project was a priority project of China-Pakistan Economic Corridor (CPEC) and hence the project sponsors including SGCC and CET had strong financial health and possess the required resources to carry out the project.

The proposed 660kV High Voltage Direct Current (HVDC) transmission facilities will be connecting Matiari converter station (about 38km northeast to Hyderabad) and Lahore converter station (about 40km southwest of Lahore).

The proposed project will be passing through Sindh and Punjab and the necessary Environmental Social Impact Assessment (ESIA) had been carried out and cleared by the respective environmental protection agencies.

The project will be built on build, own, operate and transfer (BOOT) basis and will be handed over to NTDC after 25 years.

The construction of the project will be the responsibility of PMLTCPL including the operation and maintenance (O&M) of the converter stations at Matiari and Lahore, while NTDC will be responsible for the O&M of the transmission line part of the project for which it will incorporate a separate legal entity.

The regulator said both the PMLTCPL and NTDC had confirmed that maximum efforts were being made to select the shortest possible route duly considering the future transmission plans, social and environment aspect and to reduce the construction cost, land cost and associated maintenance and security costs.

Regarding the timely completion of 4,000MW of electric power projects so that the full capacity of the HVDC could be utilised, both NTDC and PMLTCPL committed to have proper coordination with various developers of the generation projects to ensure its optimal capacity utilisation.

The licence requires that the option of transfer of technology and future HVDC projects had been duly agreed and covered in the already initialled service and implementation agreements.

Regarding the provision of bi-directional transmission arrangement based on future requirements, the SPV gave an undertaking that 80pc of the contracted capacity will be available for reverse transmission after COD.

The licence required that shareholdings of CET in the project company will not be diluted during lock-in period ie up to six years from the COD of the project. Nepra had already allowed last year a 74-paisa per unit levilised tariff for the project.

Published in Dawn, February 22nd, 2018