Govt having second thoughts about building $2.1bn Matiari-Lahore transmission line by itself

After including the $2.1 billion Matiari-Lahore Transmission Line in the priority projects under the China-Pakistan Economic Corridor (CPEC), the government is now having second thoughts about constructing the project itself, and is instead considering awarding it on build, own, operate and transfer (BOOT) basis to a state-owned Chinese company, Pakistan Today has reliably learnt.

An official source, confirming the development, said that the Ministry of Water and Power had recently conveyed it to the Finance Ministry that the construction of 865 km transmission line by itself was a financially viable and prudent decision. The 25-year BOOT award, on the other hand, would be a costly mistake. He said the final decision is yet to be made but the government is having second thoughts about the project.

Currently, four coal fired power projects are being developed in Sindh and Balochistan. Under CPEC, two coal fired power projects are being implemented, one with imported coal while the other for generating electricity from the coal reserves in Thar. The projects are time-lined to be completed by the end of 2018. The government wants to complete laying of the transmission lines before the start of power generation.

The existing network of National Transmission And Despatch Company (NTDC) is overloaded and needs expansion. As new power projects come online, new transmission lines are required for carrying the additional power to the major electricity distribution centers.

The total length of the line is about 865.55 km, of which 314.9 km falls in Sindh while remaining 550.65 km length is located in Punjab. The proposed transmission line is a 660KV high voltage direct current (HVDC) circuit starting from district Matiari near Hyderabad at a converter station located in Matiari, Sindh and ending at Punjab district of Nankana Sahab near Lahore.

A memorandum of understanding (MoU) was signed between the NTDC and the China Electric Power Equipment and Technology Company to set up 600 KV power transmission line from south to north. The Private Power and Infrastructure Board (PPIB) had sought a tariff of Rs 1.16 per kWh for the 25-year life of the project. The transmission line will evacuate power generated from the coal power projects in Sindh to load centers in Punjab.

The Energy Wing of the Planning Commission has opposed the proposed tariff of Rs 1.16 per unit terming it too high and has argued it should be halved. It has also objected to the proposed 17 per cent rate of return for the project, terming it too high as it is a transmission line project and not a power project, the source said.

“Pakistan has expertise to lay transmission lines; the transmission tariff will help recover the cost in six years, why should we give extra twenty years of profit to a foreign company,” the source said and added that the Finance Ministry also agrees with the argument but the decision hinges on the issue of availability of financial resources to undertake the project.

There is a strong debate in the official circles of the ministries of Planning, Power, Finance and the regulator, NEPRA, whether it is prudent to build a costly transmission line at a time when the government is developing on fast track basis three RLNG power plants with cumulative capacity of 3,600 MW in the load centers of Punjab.

The general consensus is that we definitely need a new transmission line considering the number of projects in the south but they should be brought in cheaper. The NTDC could develop the transmission line by arranging financing from local banks as the tariff being discussed is very lucrative and will pay off the debt about in six years, the source said.

The government is working on energy projects of a cumulative capacity of about 4,000 MW to be developed in Thar, Sindh and Balochistan’s coastal regions in the next few years and new transmission lines need to be developed for transmitting this quantum of power to major load centers located in Punjab.

These include the Hubco Coal Power Plant and Port Qasim Coal Power Plant which will be connected to converter station by two 500kV lines. The Engro Thar Coal Power Plant and Shanghai Electric Thar Coal Block I Mine Mouth Power Plant will be connected to converter station by one 500kV line, and these two power plants will be connected by one 500kVAC line.