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May 9, 2018

Cost of CPEC coal power projects per MW 40pc higher

National

May 9, 2018

ISLAMABAD: The lowest ever price for one megawatt in the International Competitive Bidding (ICB) for Jamshoro coal power project of 1320MW headed by ADB has exposed the bitter fact how costly Port Qasim and Sahiwal coal power projects under CPEC are, reveals the latest official document available with The News.

This has questioned the ability of authorities concerned who negotiated the PPAs (Power Purchase Agreements) at higher prices with Chinese contractors for said coal power plants installed under CPEC umbrella.

The EPC per MW cost through recently held ICB for first phase of 660MW of Jamshoro power plant has been achieved at $0.578 million whereas the EPC cost of Port Qasim and Sahiwal coal power project per MW under CPEC is $1.21 million per MW showing that the cost of one MW of the said coal power plants under CPEC is 40 percent higher than that of Jamshoro coal power plant. The EPC cost is reflected in the final tariff.

This means that the said two coal power plants of 1320MW each under CPEC are getting unjustified Rs60 billion ($550 million) per annum due to over pricing of these projects, a senior official at Power Division told The News.

Nepra had extended the upfront tariff of 8.3 cents per unit for both Port Qasim and Sahiwal based on the inputs provided by PPIB (private power infrastructure board) and central power purchase agency (CPPA).“So, Nepra cannot be blamed for such a higher tariff.”

However, the expected tariff of Jamshoro coal power plant keeping its EPC cost of $0.578 million per MW will be around at 6.3 cents per unit. The official said the total production of Port Qasim and Sahiwal coal power plants stands at 18.7 billion unit in a year that will cost the consumers of Pakistan Rs231 billion.

Managing Director of PPIB Shah Jahan Mir, when contacted, said that Nepra has provided the upfront tariff of 8.3 cents per unit to both Port Qasim and Sahiwal coal power projects which was higher even than the tariff PPIB had proposed.

He said the PPAs cannot be reviewed unless and until the regulator feels that tariff needs to be reviewed based on new tangible facts. Former member Energy Planning Commission Shahid Sattar said that authorities in Pakistan needs to review the power purchase agreements (PPA) with the top management of both Port Qasim and Sahiwal coal power plants and bring down the tariffs of the said two projects as per international standards. He said that Pakistan’s authorities and the regulator should keep in view that country needs to bring down the cost of down business for competing the products of other economies in the international market.

The official said that the government of China holds competition in the country and then nominates the lowest bidding company for projects in Pakistan. Now, the National Electric Power Regulatory Authority (Nepra) has also made competition a necessary condition. Competition either under Nepra conditions or under Chinese government supervision, however, has not yielded required results of reasonable and fair costs.

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