Following up on this column’s discussion of the overall CPEC energy portfolio and the lack of transparency observed in the progress updates on projects, let us look at the recent progress on individual projects (Read: “CPEC energy portfolio” published June 23, 2016).
One of the projects given high priority under the CPEC fast track route is the Port Qasim coal-fired power plant having an installed capacity of 1320 MW. The project is located 37 kilometers from Karachi in the industrial park of Port Qasim. The plant comprises of two units of ultra-super critical technology of 660 MW each with one unit expected to be commissioned by June 2017, and the second unit by April 2018.
The project is being sponsored by Sinohydro, China and Al-Mirqab Capital, Qatar. The Port Qasim plant was awarded a levelised tariff of Rs8.1176 per kWh in February last year and will use imported coal as fuel. The project has achieved financial close with the first drawdown made in December 2015, and the total cost of the project will be roughly $2 billion.
Latest updates available with BR Research reveal that civil works on the site are in full swing. Additionally, the National Transmission and Despatch Company (NTDC) have issued its Report 2 on the project.
The lease indenture has been signed between the Port Qasim Authority (PQA) and the sponsors. However, the registration of the lease indenture by the Sindh government is still unresolved because of a dispute over land ownership with the federal government. Hopefully, these inter-provincial differences will not escalate to the point of slowing or shelving the project.
According to an official progress report, almost 90 percent of the machinery required has been ordered and 85 percent of the reinforced cement concrete (RCC) work has been completed. Moreover, the 4.5 MW power requirement of the project will be provided by K-Electric.
Other issues being faced by the project are exemption of sales tax on dredger, which is to be imported for the jetty construction. And then there is also an IRIS software issue with the Federal Board of Revenue with regards to the exemption of withholding tax imposed on imports of plant and machinery.
The project’s next steps will focus on building a water supply, which is an integral part of a coal power plant. It will also be locating land for ash disposal within a 10 km radius. Going forward, the timely evacuation of power also needs to be addressed, and for this purpose more needs to be done to upgrade the dilapidated transmission network so it can handle the increased load. More on other energy project updates in the coming days in this column.
