ISLAMABAD - Despite offering world’s one of the most lucrative tariff, National Electric Power Regulatory Authority has accepted tariff petition of Chinese Company for its first local fired power plant asking for further concessions.

The request for setting up 300 MW power plant , worth $589 million has been submitted by China Machinery Engineering Corporation under Pak-China economic corridor.

According to the documents submitted by CMEC in Nepra, The company has sought cost plus coal tariff, despite the fact that Nepra has already approved a very profitable coal tariff.

The plant would be established at Salt Range in Pind Dadan Khan, Punjab province and would use indigenous coal available in salt range. The project would be financed by Chinese bank under Sinosure insurance coverage, while equity would be raised by CMEC with its own funds or via equity loan. The average turnover of Beijing based company is around $3.5 billion in last three years with paid up capital of Rmb 4125.7 million Yuan. The company has already completed over ten projects with total installed capacity of 1.5 GW in Pakistan including Guddu Unit 4, Jamshoro unit 2,3 and 4, and Muzafargarh Unit 4. The company is executing Neelam Jehlum Project which has a history of delays. Interestingly the company has already asked for special incentives like setting up a special pricing mechanism from government of Punjab, which it has hinted in its request under special technical features.

Given the special technical features of this project the existing up front tariff are not directly applicable and new tariff is needed for this project, the request said.

According to sources it is the ambitiousness of the government to set up new electricity generation projects that foreign companies are asking for out of the way incentives and high tariffs, which are not offered anywhere in the world. There has been pressure from government to facilitate new projects, sources said.

Newly appointed Nepra Media director Ayesha Tassaduq denied that the application was entertained on government pressure.

Nepra admitted the tariff petition as it fulfils all the legal/ technical requirements and we have to admit all such requests which fulfill the requisite criteria, and it would be decided in 5th May public hearing, Tassaduq wrote.

However, she did not elaborated that what is the legal and technical requirements on which this petition is entertained when Nepra has recently announced a very lucrative tariff, aimed to attract foreign investment in the country.

In legal regime the company has mentioned old 1997 Nepra act and 1998 Rule 3, without explaining that  other than transportation cost and purification costs what are the extraordinary situation that company needs special tariff.

The proposed date of project completion is 40 months while repayment period has been mentioned 10 years, If project is to be set up under special conditions, how the project is feasible at first place, there is a list of questions, which needs further explanation from Nepra. The applicant has not mentioned that what others benefits Punjab Government has already approved or promised to the company for setting up a small 300 MW plant.

It is pertinent to mention that the authority has not yet come out of the allegations that recently announced coal tariff was announced on government pressure, ignoring the fact that it will burden the general public.