Matiari-Lahore Transmission Line Project: PMLTC-PPIB- NTDC agreement amended

ISLAMABAD: Chinese company M/s PMLTC, Private Power & Infrastructure Board (PPIB) and National Transmission and Despatch Company (NTDC) on Wednesday signed an amendment to the Implementation Agreement (IA) for ±660 kV HVDC Matiari - Lahore Transmission Line Project.

Federal Minister for Energy (Power Division) Hammad Azhar as chief guest witnessed the agreement signing ceremony between NTDC and Pak MLTC and amendment No 1 to the IA.

The documents were signed by Shah Jahan Mirza, Managing Director PPIB for Amendment to the IA, Managing Director NTDC Engr Dr Khawaja Riffat Hassan for Addendum and Ms Zhang Lei, President and CEO of PMLTC for both the agreements. SAPM on Power and Petroleum, Tabish Gauhar and Secretary Power Division Ali Raza Bhutta were also present on the occasion.

Recently, Federal Government extended Required Commercial Operate Date (RCOD) of $1.7 billion for six months after resolution of dispute on ± 660kV HVDC Matiari to Lahore Transmission Line Project after negotiations with the Chinese company.

The 878 kilometres 4000MW project is being executed by Pak-Matiari Lahore Transmission Company (Pvt) Limited, on Built-Own-Operate-Transfer (BOOT) basis for a term of 25 years. The construction of the project is complete and is under testing and commissioning phase. The project will evacuate power from the new generation units located in the south including Thar coal-based projects. The project is included in the CPEC portfolio. The ECC on July 25, 2017 approved the Security Package Documents i.e. Implementation Agreement (lA) and Transmission Services Agreement (TSA) which were subsequently executed on May 14, 2018. The NTDC will be responsible for operation and maintenance of the transmission line for which an Operation and Maintenance (O&M) agreement was executed with the Company on May 14, 2018.

According to sources, on December 2, 2020, severe frequency obligations were observed in the system when the project was under monopole low power testing; consequently, the testing was stopped and the test was declared failed by NTDC and Owner Engineer M/s. Hatch, Canada (OE) of NTDC. The company submitted Root-Cause Analysis Report (RCAR), which was reviewed by both Independent Engineer (lE) & OE - OE declared the Certificate of Readiness as null and void and lE & OE recommended certain additional measures to be taken at Matiari converter station prior to start of testing.

Thereafter, NTDC revisited all technical and contractual obligations which were to be fulfilled by the company under the TSA and issued a Notice of Dispute (NoD) on December 11, 2020 highlighting various contractual obligations not fulfilled by the company and challenged the certificate of readiness as well as testing and commissioning of the project pursuant to section 8.9 of the TSA.

Afterwards, as a result of extensive discussions between NTDC, the company, OE and IE, way forward on resolution of issues was agreed on the issues raised under the Notice of Dispute and MoU was signed between the company and NTDC, which was subsequently approved by respective BoDs of NTDC and the company. In the light of MoU, draft addendum agreement to the TSA and O&M Services Agreement were agreed between the company and the NTDC and their respective BoDs accorded approval.

Pursuant to the terms of addendum to the TSA, it has been, amongst others, agreed between NTDC and the company that during pre-COD period from (March 1, 2021to August 31, 2021) the company shall be paid as per the maximum demonstrated capability successful tested in accordance with the final tariff approved by Nepra. Furthermore, the agreed changes were primarily made on account of the reason that the project activities and certain obligations to be fulfilled by respective parties were impacted due to Covid-19 pandemic and consequently Required Commercial Operations Date (RCOD) of the project needed to be extended from March 1, 2021 to September 1, 2021 and corresponding changes were necessitated to be made in respect of testing/ training modalities.

Cabinet Committee on Energy (CCoE), in its decision on February 1, 2018 fixed RCOD of the project in March 2021 while considering timelines of various generation projects sought to be evacuated via the project. It was also mandated that in case commissioning of any such project is delayed, then such projects will pick up pro-rata Liquidated Damages (LDs) under their respective PPAs so that financial loss to NTDC should be avoided.

The ±660 kV Matiari – Lahore Transmission Line Project (the Project) is the first ever HVDC Transmission Line Project in Pakistan which is being executed under the framework of China-Pakistan Economic Corridor (CPEC) Agreement. It is also the first project being developed pursuant to the provisions of Private Sector Transmission Line Policy Framework approved and announced by the Government of Pakistan (GOP) back in 2015. This Transmission Line is spread over a span of 886 km and capable of transmitting 4000 MW power at ±660 kV. The Project is being executed on Build-Own-Operate-Transfer (BOOT) basis and will be transferred to NTDC after a term of 25 Years. The project entails foreign investment to the tune of $1,658.34 million.

According to Power Division, in the light of MoU, Addendum Agreements to the TSA and O&M Agreement were agreed between PMLTC and NTDC which were later approved by their respective BoDs. Moreover, an Amendment to the IA was also finalized and approved to harmonize these changes in the TSA and the IA. These amendments are being signed today between the respective parties. As per mutually agreed terms of the agreement, the Commercial Operations Date (COD) of the Project has been extended from 1st March to 1st September 2021. Nevertheless, during this period, NTDC would be allowed to transmit available power, for which the Project Company would be paid as per tariff to be approved by Nepra.

While speaking on the occasion, Federal Minister for Energy (Power Division) said the government was actively pursuing the completion of energy projects including CPEC projects.

Copyright Business Recorder, 2021