ISLAMABAD: Ministry of Foreign Affairs has reportedly cautioned the government that future Chinese assistance will be in jeopardy if dispute between NTDC and a Chinese company sponsoring Matiari-Lahore HVDC transmission line is not resolved amicably, well informed sources in Foreign Office told Business Recorder.
Ministry of Foreign Affairs has issued the warning at a time when there is concern in the country that the pace of progress on China Pakistan Economic Corridor (CPEC) has slowed. Sinosure has not yet issued risk insurance for projects like Azad Patan hydropower and Rashakai SEZ. According to sources, Pakistan Mission in Beijing held a meeting with China Electric Power Equipment and Technology Co Ltd. (CET), who is the sponsor for the 886 km Matiari-Lahore HVDC transmission line. The meeting was held at the request of Chinese National Energy Administration (NEA).
The CET president shared with the Mission that they have been approached by the NTDC that it was facing difficulty in completing the remaining interconnecting lines on time as well as forecasting lower overall demand forecasts for power. Citing the adverse impact of the Covid-19 pandemic as a force majeure, NTDC has requested CET to delay the commercial operation date (COD) of the project by seven months and 19 days, without any financial compensation to CET.
The CET president also informed that they had approached NTDC to resolve the matter. They even tried discussing the issue with Private Power Infrastructure
Board (PPIB), Power Division and CPEC Authority to find a solution, but were not successful. Eventually they had to seek NEA’s intervention.
While understanding NTDC's point of view, President CET further highlighted the following: (i) NTDC may have its reasons to invoke the force majeure clause, yet from CET's side the project was ready to be commissioned by agreed date of March 1, 2021. CET therefore hoped that NTDC would continue the commissioning process so that COD could be achieved as planned and the Build, Own, Operate, Transfer (BOOT) period of 25 years would remain unchanged;(ii) start of project as per agreed commissioning date would enable the company to draw down its manpower on the project keeping them on standby while the project was already complete, would add to unnecessary costs and would also pose a risk given COVID-19 and security concerns;(iii) CET was ready to discuss adjustments of payments to the company to cover at least basic costs (e.g. interests, tariffs etc.) only for the seven months' requested extension period, but not beyond that date. It expected the full payments of its dues as agreed in the contract after the extension period and ;(iv) CET also hoped that NTDC could take over the Operations and Maintenance (O&M) of the line itself while CET would be responsible for the two converter stations as stipulated in the O&M agreement.
According to the Foreign Office, its Mission has emphasized that Pakistan should honour its contractual obligations and commitments as any breach of contract or reopening of agreed terms and conditions make Pakistan's case difficult for seeking assistance from Chinese financial institutions like EXIM Bank and Sinosure.
"Such delays could have an impact on our future projects as well. Despite our efforts, Sinonure has not yet issued risk insurance for projects like Azad Patan hydropower and Rashakai SEZ," said Director General (China) Mudassar Tipu.
Foreign Office contended that as Matiari-Lahore HVDC transmission line was an important infrastructure project, CET's concerns may be looked at for an amicable resolution.
Copyright Business Recorder, 2020
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