The government has formed an international project management holding company by the name of National Power Parks Management Company (Private Limited) to implement LNG-fired power projects of 1200MW capacity to be established in public sector with an investment of Rs 380 billion from PSDP. The sources said private sector will establish LNG-fired projects of 2400MW for which Nepra has already completed a public hearing to approve an upfront tariff.
Three companies have also been set up in the public sector, namely Ravi Power Park Company (private) Limited, Abaseen Power Park Company (private) Limited and Chenab Power Park Company (private) Limited, which would opt for an upfront tariff and operate on a profit earning basis to facilitate privatisation of LNG-fired power plants immediately after COD.
Prime Minister Nawaz Sharif, sources said, has also nominated Additional Secretary Incharge Ministry of Water and Power, Younus Dagha, Additional Secretary, Omer Rasul and Joint Secretary Zafar Abbas as promoters, first directors, and shareholders for the newly formed companies.
Well-informed sources told Business Recorder that Ministry of Water and Power has sought exemption from PPRA rules for LNG and coal-fired power plants. In this regard a letter has been written to Managing Director, PPRA. According to sources, Prime Minister Nawaz Sharif while presiding over a cabinet meeting had decided that for the issue involving PPRA rules and agreement between commercial entities, Cabinet is not the competent forum. He directed the Ministry of Water and Power to approach relevant fora for a decision on this matter.
Ministries of Finance, Petroleum and Water and Power have prepared financing plan of three LNG-fired power plants for which a timeline will be given to the Prime Minister. The three projects will be set up in Bhikki, District Shekhupura, Balloki (Distrit Kasur) and Haveli Bahadar Shah (District Jhang)).
Giving details of coal-fired projects, the sources said that an insurance premium for 21 projects under CPEC has been capped at 7%. Projects with a sovereign guarantee component would be treated according to market principles. Sinosure would extend guarantees subject to the payment of insurance premium. Sinosure would also provide commercial risk guarantees for up to 65%. The 35% balance would be shared by the owner of the project, financial institutions and contractors. Green channel processing would be extended by Sinosure and financial institutions including Exim Bank, CDB and ICBC subject to timely provision of documentation by the owner. In case Exim Bank is able to submit all Project documents in time, the related ministry will provide finances in one month instead of the normal six months.
According to sources, Prime Minister of Pakistan is personally monitoring the activities related to CPEC through regular meetings of the Cabinet Committee on Energy. The MoWP convenes weekly meetings every Wednesday with all the CPEC listed project sponsors for achieving the targets. Due to active follow up by the MOWP with project sponsors and relevant agencies, three wind projects (200 MW) have completed all milestones and will achieve a financial close by March 2015. In addition, three projects of coal-based power Generation (3300 MW), one project of hydro Power (870MW), one Mining Project (3.8 MTPA) and one Solar PV project (900MW) have also reached advanced stages. Implementation and Power Purchase Agreements have been finalised and shared with National Energy Agency (NEA) for its review.
Keeping in view the recommendations of NEA, a Chinese company, a supplemental agreement has been drafted covering the provisions of CPEC agreement. Aspects covered under the supplemental agreement are as follows: (i) most preferable conditions to Chinese Investors; (ii) 22% revolving /escrow account; (iii) terms on land acquisition would be favourable. The clause relating to cancellation has been removed; (iv) access of personnel and equipment; (v) mechanism for foreign exchange conversion; and (vi) Chinese standards will be accepted.
The sources said Cabinet Committee on Energy had agreed to provide a sovereign guarantee to cover coal transportation. In this regard draft inland coal transportation agreement has been prepared and shared with project sponsors for review. Officials of State Grid/CET visited Pakistan on 22nd-23rd January 2015 to explore the possibility of providing electricity to Pakistan out of their northern grid through Kashgar on the Chinese side and into the Northern Areas of Pakistan. State Grid China showed an interest in the following projects which are to be included as Prioritised Projects under CPEC: (i) Interconnection project for import of power from China; (ii) Matiari to Lahore Transmission Line ± 660 HVDC Project; and (iii) Matiari to Faisalabad Transmission Line ± 660 HVDC Project.
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