Wapda row with Shenhua resolved: new tariff to be offered for coal-based plant

The main impediment between Wapda and Shenhua group has been resolved as the country''s biggest power producer and distributor have finally agreed to procure the facility from coal-fired power plants at increased rates.
Sources told Business Recorder on Saturday that the government had re-established contacts with the Chinese group and invited it to resume its work on the 600MW, $500 million coal-fired power plant in Thar. The government had also pressed Wapda to increase the tariff for the coal-fired power producer, which is viable for both parties.
Sources said that a delegation of Shenhua group was due on October 19 on a five-day visit. The delegation, during its stay, would resolve all pending issues including signing of tariff agreement. The new tariff, at what cost Wapda would buy electricity from the Chinese company, has not been revealed so far.
Petroleum and Natural Resources Secretary has called a meeting on October 17 in Islamabad to discuss the issues with Sindh Coal Authority and Sindh Mines and Minerals Department. The meeting would discuss facilities to be provided by the government in Thar, sources said.
They said that President Pervez Musharraf was keen to see the project materialise. He was disappointed over the delay despite his hectic efforts to bring the Chinese company back to work.
The recent developments have shown that the government was very much worried about energy shortages in the country and wanted to utilise resources at the earliest to avoid any power crisis in the country. Sources said that formal announcement about the project would be made during the visit of the Chinese president in November next.
It is learnt that the Chinese group would increase power production from 600MW to 1000MW. If the project talks finalised then the company would start work by year-end, or early next year. The project would be completed in three years. The Shenhua group left the project in 2005 due to dispute about tariff. Wapda''s reluctance to offer fair tariff put the plans of the group on hold.
Wapda had offered 5.7 cents per unit power but the group had the stand that since Wapda was paying eight to 13 cents per unit to gas-based, diesel-based and fuel oil-based IPPs, it should increase the tariff for the electricity produced by the coal-fired power plants.