ISLAMABAD: The Steering Committee on Pak-China Relations, headed by Deputy Chairman Planning Commission, has directed Power Division to expedite execution of the project of electricity supply and connectivity of Gwadar with national grid and supply of additional electricity to Gwadar from Polan (Iran).
On relocation/ construction of Model Custom Collectorate at Gwadar, the Committee noted the position submitted by the representative of FBR that the matter will be put-up in forthcoming meeting of governing body of Gwadar Development Authority (GDA) exempting the built-up structure or explore option for alternative land. The Committee directed FBR to share the outcome of the meeting with CPEC Secretariat.
The FBR will notify the revised rules, exempting Federal Excise Duty (FED) for investors of Gwadar Free Zone, within four weeks.
On Anti-Dumping duties on materials to be imported for construction of Gwadar airport and Pak-China Friendship Hospital, the Committee noted that there was no justification for imposition of anti-dumping duties on materials imported under foreign grant-in-aid projects. It was; therefore, decided that NTC/ Ministry of Commerce (MoC) will submit a summary to the Cabinet, within two weeks, for exempting foreign grant-in-aid projects from anti-dumping duties.
The Chinese contractor for Gwadar Airport and hospital projects has stated that certain steel materials to be imported for the projects attract anti-dumping duties imposed by National Tariff Commission.
Power Division informed that COD extensions/ FME of the following projects have already been granted: (i) 884 MW Suki Kinari HPP; (ii) 720 MW Karot HPP; (iii) 330 MW TEL, Thar Block II; (iv) 330 MW Thal Nova,(Thar Block-II); and (v) 1320 MW Thar Block-1.
The Committee also noted Nepra’s assurance that the decision on review petition for construction stage RoE adjustment pre-COD tariff of 660 KV HVDC Matiari -Lahore Transmission Line will be made within two weeks. Chinese ambassador to Pakistan has also written a letter to Chairman Nepra seeking his support in resolution of this issue and the Chinese company has claimed substantial amount as RoE adjustment.
On reversal of withholding tax on shareholders’ dividends (25 per cent to 7.5 percent) sponsors of power projects installed under Power Policy 2002 agitate the point that the tax on dividends has been increased from 7.5 per cent to 25 per cent. As this is not a pass-through item, their profitability has been adversely affected by l9 per cent and they have demanded that the tax rate should be revised back to the original level.
The Committee noted the update provided by SAPM on CPEC Affairs, Khalid Mansoor that the summary in the matter had been initiated by Power Division and was awaiting FBR comments before its submission to ECC. The matter had also been discussed in a meeting held in the office of Advisor on Finance, where FBR was asked to furnish their views at the earliest.
1320MW Sahiwal Coal Power Project (HSR): Regarding Royalty Settlement with PQA/ MoMA for coal handling it was noted that as per Implementation Agreement (IA) in September 2016 between PQA and the Company, PQA is charging on minimum quantity (3.5MTPA) of imported coal but Nepra is only adjusting actual quantity (2.8 MTPA at 75% load factor take or pay) of imported coal in pass-through tariff followed by payments from CPPA (G), accordingly. Company signed the IA in September 2016 based on low coal calorific value (4800 Kcal/ kg at 85% load factor take or pay). However, later in September 2016, Nepra issued fuel mechanism under which minimum calorific value for up country coal was fixed at 5500 Kcal/ kg resulting in a drop of maximum annual coal throughput to 3.2 MTPA. Hence, the company is facing unnecessary financial loss because of the unsettled delta between Nepra and PQA. HSR has faced almost $ 14 million loss as of now.
The company proposed the following possible solutions: “idle capacity of berth 3 & 4 of PQA which is currently being used by Sahiwal Power Plant to offload the coal, can also be used for open commercial purposes (e.g. other importer and 660MW Lucky power plant as PBIT has already declined to handle the coal for this power plant) with the consent of PQA, PBIT, Nepra, HSR, MoMA; this way some portion of unsettled delta between PQA and Nepra may be settled for Sahiwal Power Plant….royalty IA may be reopened to adjust the due royalty based on actual quantity of coal, or Nepra may adjust the pass though tariff on minimum quantity of coal (3.5 MTPA).”
The Committee noted the briefing by SAPM on CPEC Affairs and decided that the parties should abide by their respective obligations under the relevant contracts. The Committee gave similar verdict in case of Sahiwal coal power plants.
The issue of Approval of Coal Handling Tariff for Jetty Operator (Fyuon) has been assigned to DCPC, who will review the matter in consultation with all stakeholders and make recommendations on the way forward to the Committee within sixty days.
The Committee also decided that 600 MW Zonergy (Quaid-i-Azam solar power plant) project should be implemented as per the ARE Policy and the commitments made at the 10th JCC.
Kohla Hydropower Project: Cost adjustment was rejected in Nepra hearing on October 12, 2021 for “Water Bodies Structure and Sewage Treatment Plant” in tariff as pass through component which was approved by ECC on October 2, 2020. The Committee noted Nepra’s assurance that the decision in the matter will be granted within three weeks’ time.
Power Division will arrange a meeting within two weeks between Federal Minister for Energy and Prime Minister AJK and other relevant stakeholders to resolve the issue regarding adoption of 1 per cent fixed and final WHT on offshore procurement contract by GoAJK as approved by ECC on May 5, 2021 which was signed and witnessed by CS GoAJK and PM AJK on June 25, 2020 at PM House Islamabad in Tripartite Agreement (TPA) between the Company, GoP and G/o AJK.
The Committee discussed other issues being faced by the Chinese companies and issued instructions of their early resolution. However, the issue of Century Steel and additional incentives for China-Road & Bridge Construction Company (CRBC) did not come under discussion.
Copyright Business Recorder, 2021
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