Chinese firm backs out of power project
Wednesday, May 18th, 2016 11:13:08 by fatimaarshad
A Chinese firm which was supposed to work on a 330 MW coal-based power project, has bowed out of the project. The Punjab-based power plant was supposed to start producing electricity by the end of next year.
The $590 million, coal-based power project was a key part of the high profile $46 billion China-Pakistan Economic Corridor (CPEC) program which was launched last year by President Xi Jinping and Prime Minister Nawaz Sharif.
It has been reported that the reason the company called China Machinery Engineering Corporation (CMEC) has backed out of the project is because of issues relating to feasibility of producing enough energy for running a 330 MW project and a tariff allowed by the National Electric Power Regulatory Authority (NEPRA) that was lower than what it had expected.
CMEC had been lobbying for the electricity rate to be 11.67 to 12.4 cents per unit, however this rate was not approved by NEPRA as it is far higher than upfront tariffs for projects on Thar coald and imported coal. The rate allowed by NEPRA was 30-year tariff of 8.55 cents per unit.
CMEC was also a key contractor in the $4 billion 969 MW Neelum-Jhelum Hydropower Project in Azad Jammu & Kashmir, and so far, that project is still underway.
A Letter of Interest (LOI) for the project was already issued and the place where the project was supposed to start, was decided as Pind Daden Khan in Punjab’s Salt Range. The government’s power policy required submission by the sponsor of a perform¬ance guarantee of $1,000 per megawatt for fulfillment of LoI conditions and $5,000 per MW performance guarantee for letter of support condit¬ions. The guarantees are con¬¬fiscated by the government in case of sponsor’s failure.
CMEC had to pay $300,000 for failure to deliver on the LOI conditions.
Short URL: https://www.newspakistan.pk/?p=53025
Posted by fatimaarshad
on May 18 2016. Filed under Pakistan.
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