PPIB extends time limit of financial close for two major CPEC power projects

ISLAMABAD: The government has extended the time limit for accomplishing the financial close of two major power projects for Chinese investors on Tuesday.

The major projects comprise of 4,000-megawatt Matiari-Lahore transmission line & 300MW Gwadar Coal Power Project which is considered under the China-Pakistan Economic Corridor (CPEC).

A meeting of the Private Power and Infrastructure Board (PPIB) held on Tuesday chaired by Power Minister Omar Ayub Khan briefed a three-month additional time to the $1.7 billion Matiari-Lahore for attainment of its financial latest by February 29^th, 2019.

However, in March 2018, the contractors were already granted a six-month extension to achieve financial close by December 1^st.

But, the amended deadline was authorized on the basis that commercial operation data (COD) of the project will remain unchanged as March 31^st, 2021.

According to details, the cause for the setback was due to stiffening up transmission line service contract, along with the wrapping up of loan associated problems with the State Bank of Pakistan (SBP) and impediments in land leases.

Likewise, almost a nine-month extension was granted to the 300MW Gwadar coal-based power project to accomplish its financial close by August 2019. But it had experienced a lot of delays in the past along with altering investor portfolio.

According to sources, it is observed that the project is presently facing many problems which needs attention such as contractors have encountered problems in attaining land, which is almost resolved but would need cost review in the tariff. However, majority of the setbacks were due to internal management and environmental issues.

According to PPIB, these extension granting will assist sponsors to get tariff from the power regulator and LOS from it.

Furthermore, this will support construction work to originate and present necessary power supply to Gwadar so as to facilitate encouragement of businesses for the fresh established port, augmentation of socio-economic activities and establishment of Special Economic Zones and Export Processing Zones in Gwadar.

The official notification issued by PPIB on Tuesday stated, “Keeping in view the significance of +660kV High Voltage Direct Current (HVDC) Matiari-Lahore Transmission Line Project which is purposely intended to supply power evacuation for Thar coal-based power projects, the board has decided to permit extension in letter of support (LoS) for accomplishing financial close.”