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Nepra to increase wheeling tariff for $2.1bn Matiari-Lahore line

Nepra to increase wheeling tariff for $2.1bn Matiari-Lahore line

LAHORE: The National Electric Power Regulatory Authority (Nepra) is expected to announce a revised, higher wheeling tariff for the proposed $2.1 billion 660kV high-voltage-direct-current (HVDC) Matiari-Lahore transmission line project over the next few days.

The new tariff being determined on a review petition filed before the authority by the Private Power Infrastructure Board (PPIB) is projected to be less than $0.8 per kilometre. It is likely to be lower than $0.94 per kilometre demanded by the engineering, procurement and construction (EPC) contractor, but higher than $0.71 per kilometre determined earlier by the power-sector regulator in August this year.

The tariff will be for 25 years when the contractor will transfer the line to the National Transmission and Despatch Company (NTDC).

“The revised tariff could be set anywhere between $0.76 per kilometre and $0.80 per kilometre with a view to ending the impasse holding the contractor, China Electric Power Equipment and Technology, a subsidiary of State Grid Corporation, from starting work on the project.

“The new HVDC transmission line is crucial for evacuating 4,000 megawatts of electricity from the new coal power plants being developed in Sindh to load centres in Punjab,” according to an official who didn’t want to give his or his department’s name because he was not authorised to speak on the matter before the determination of the revised tariff.

Together, the new power plants being set up in Thar, Hub and Port Qasim will produce 4,950MW electricity when completed. The project will take at least 27 months to complete against the normal time period of 36-42 months.

Officials claimed that the wheeling tariff close to $0.80 per kilometre – inclusive of security, administration and mobilisation costs – will be acceptable to the Chinese contractor, which had earlier refused to implement the project after Nepra’s earlier tariff determination.

They said the determination of the revised tariff will bring down the EPC costs by a quarter from the original estimate of $497m to $402mn – or from $566,000 per kilometre to $458,000 per kilometre – to the extent of the 878-kilometre-long tran­smission line and three repeater stations. While determining the tariff for the project, Nepra had also revised down the EPC costs for the entire project from $1.7bn to $1.3bn, which the PPIB has challenged in its review petition.

The Lahore-Matiari transmission line, which is the first project of its kind being implemented through the private sector in Pakistan under the ‘build, own, operate and transfer’ mode, is part of the priority projects under the China Pakistan Economic Corridor (CPEC). Besides this line, NTDC plans to lay another transmission line from Matiari to Faisalabad with the help of the same Chinese firm. Many doubt that coal power plants will become commercially operational long before the new transmission line is laid, forcing the government to pay capacity and other charges to them without using their generation.

“NTDC had decided to implement the project through a foreign firm because it does not have resources to execute it on its own. Neither are international lenders prepared to finance anything related to coal power,” an NTDC official said when approached for his comments. He was hopeful that the project would complete before the new coal power producers started their commercial operations without giving any details.

He further said the overall project cost, including the ECP price, will be determined once the revised tariff is announced by Nepra. He said the future participation of private firms and foreign contractors largely depended on the success of the Lahore-Matiari project.

Published in Dawn November 17th, 2016

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