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Stiff penalties await coal power projects in case of delays

Updated March 02, 2018

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KARACHI: Two coal-fired power plants are coming up at Port Qasim with a combined output of 1330MW. Seven different projects of this type are moving ahead across Sindh, making power transmission a critical element to carry the electricity to load centres upcountry.
KARACHI: Two coal-fired power plants are coming up at Port Qasim with a combined output of 1330MW. Seven different projects of this type are moving ahead across Sindh, making power transmission a critical element to carry the electricity to load centres upcountry.

LAHORE: The government has warned power projects under construction in Sindh that if their dates of commercial operations are delayed, they will be responsible for paying the capacity charges of the Matiari-Lahore transmission line, which is being laid by a Chinese company.

The line is the first private investment in the transmission sector, and will be the first high voltage DC line power line in the country.

It is designed to carry power from up to eight coal based projects being built in Sind, with a combined gross generation capacity beyond 5500MW. The line will have a design transmission capacity of 4000MW and traverse 878 kilometres, at a total project cost of $2.12 billion, according to the tariff petition filed with Nepra.

Govt juggles burden of capacity charges from possible delays in coal power plants

The government is concerned that the line might become operational while the coal fired projects whose power it is meant to evacuate could be struck with delays, even though the line is scheduled to enter commercial operations in March, 2021, while the coal projects are scheduled for COD on dates ranging from June 2018 till March 2020.

But in the event of any any delays, capacity charges of the line will have to be paid by the sponsors of the coal fired projects to the Chinese company that will build and operate the transmission line, as per a recent cabinet directive.

The Private Power and Infrastructure Board (PPIB), which filed the tariff petition for the transmission line, has now been told by the Cabinet Committee on Energy through a letter dated Feb 1, 2018, that “completion of ongoing power projects in the south should be ensured within their timelines for availability of requisite power to be evacuated through HVDC transmission line”. In case any of the coal fired power projects in the south face delays in their commercial operations, PPIB must “ensure that the projects are...required to share the cost of capacity payments in case the same are accrued due to delayed COD of the projects, by incorporating the same in all future IAs/PPAs.”

The approximately monthly power evacuation and its transportation from south to north is Rs2.5bn per month, to be paid to the Pak Matiari-Lahore Transmission Company Ltd (PMLTCPL), according to a source in the power division..“In case the commissioning of the transmission line is delayed, the Chinese firm will have to pay a fine to the government to the tune of about Rs30 million per day” the source told Dawn. “The same fine is also liable to be paid by the government to the firm if it commissions the project on time, but remains idle in case of delayed CODs of the power plants.”

The government is hoping to enter into a formal agreement with PMLTCPL soon in this regard.

Published in Dawn, March 2nd, 2018