Matiari-Lahore transmission line: ECC approval sought to extend closing financial deadline

Private Power Infrastructure Board (PPIB) has sought Economic Co-ordination Committee''s (ECC) approval for extension in financial closing deadline till December 31, 2018 for ±660 kV HVDC Matiari-Lahore Transmission Line without doubling Performance Guarantee (PG), well informed sources told Business Recorder.
Giving the background, the sources said, ±660 kV HVDC Matiari-Lahore Transmission Line (approx, 878 km) with an evacuation capacity of 4000 MW with Convertor Stations at Matiari and Lahore (the HVDC Project) is included in the list of priority projects under CPEC Agreement. In pursuance to ECC decision dated 20th December 2016 and subsequent approval by the PPIB Board, Letter of Intent (LOI) was issued to China Electric Power Equipment & Technology Co Ltd. (CET) on March 27, 2017.
The Special Purpose Vehicle (SPV) for the HVDG project ie Pak Matiari-Lahore Transmission Company (Pvt) Limited (PMLTC) obtained tariff on May 4, 2017. Subsequently, PPIB issued Letter of Support (LoS) to PMLTC on August 4, 2017 thereby requiring PMLTC to sign/execute the project agreements and achieve Financial Closing (FC).
The sources said, several rounds of discussions were held between PMLTC, PPIB and NTDC to finalize the project agreements; however, being the first project under Transmission Line Policy 2015 and the first HVDC transmission line project in Pakistan, there were certain issues that required approval/clarification from various fora and needed to be resolved before signing of the project agreements.
Most of the issues have now been resolved and the agreements are ready for signing. According to sources, Guidelines under Transmission Line Policy 2015, earlier approved by the ECC, stipulates that the maximum time allowed for achieving the FC will be nine months from the date of issuance of LoS. Accordingly, PMLTC is required to achieve FC by May 4, 2018. Nepra has allowed construction period of 27 months from the construction start for the project in its tariff determination considering the FC and construction start by May 4, 2018, the deadline for achieving Commercial Operations Date (COD) becomes August 4, 2020.
The HVDC project has been envisaged to evacuate power from upcoming Coal-fired Power Projects (CFPPs) being developed at Thar and near Karachi as well as 1100 MW K-2 project at Karachi. In order to optimize benefits from the HVDC project, PPIB believes that it is prudent to align commissioning of the HVDC project with the construction of power plants to avoid capacity payments to the HVDC project without power being transmitted owing to non-commissioning of power plants. Earlier, NTDC communicated that in view of CODs of CFPPs aligned with the HVDC project, HVDC project would be required by November 2020. However, there are delays in commissioning of some of the CFPPs due to various issues.
The Cabinet Committee on Energy (CCoE), in its meeting held on February 1, 2018, discussed different scenarios for COD of the HVDC project and approved extension in its COD from November 2020 to March 2021. Accordingly, NTDC Board has finalized COD of the HVDC Project as March 1, 2021.
Considering 27 months construction period for the HVDC project allowed by Nepra, construction start date for the HVDC project works out to be December 1, 2018. If the FC deadline is considered to be the same as the construction start date ie December 1, 2018 (to provide 27 months construction time after FC) instead of May 4, 2018, the HVDC project will have time to achieve FC in about 16 months instead of 9 months as allowed under the Transmission Line Policy 2015. The sources said summary is expected to be considered in the forthcoming meeting of the ECC.