Exclusive: In an exclusive communiqué to walizahid.com blog, Lijian Zhao, DCM Chinese Embassy in Islamabad, Pakistan, clarifies the false reporting about bidding and Upfront tariff regarding the Port Qasim Coal-fired Power Project.
This blog – which prides itself as the most authentic place on everything Pakistan – has been one of the earliest blogs in the world to publish reports on CPEC and OBOR.
As a matter of social responsibility, it has been fighting misreporting and disinformation on CPEC and other significan issues of national importance by the vested interests.
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In his clarification, Lijian Zhao states:
Have you seen CPEC & OBOR stories on this blog?
It is misleading to say that Port Qasim Coal-fired Power Project is awarded on a very high upfront tariff without bidding.
Before drawing any conclusion, one must be familiar with the country’s relevant laws, regulations and policies, otherwise the statement might be one-sided speculation.
Let’s take an overall picture:
1. Upfront tariff for coal-fired projects is issued by the independent regulator, NEPRA, after rounds of hearing and cost verification by relevant stakeholders and experts in the industry, which lasts more than a year, aiming to make sure that the tariff is derived prudently on the fair, reasonable and competitive basis.
2. Compared to the “cost plus” tariff approval procedure, which takes normally 9-24 months and passes through the actual cost of a power project plus the same rate of investment returns, choosing upfront tariff is not only a time-saving solution in response to addressing the dire energy need of Pakistan in the short timeframe but also shifts the cost-control risks to the developer, meaning that even if the cost overruns, the tariff will remain the same.
Therefore, under the Upfront Tariff scheme, there is no need to conduct the bidding and the same is true of other coal-fired power plants. Port Qasim Coal-fired Power Project is not the only one choosing this mechanism.
3. The Port Qasim project has gone through every necessary procedure required by federal and local governments and has fulfilled all targets of development as per schedule or in advance so far.
The developer is under huge pressure to satisfy the legal requirements of the power policy in time otherwise their LOI guarantee, LOS guarantee and Company credit letter that are worth more than $45 million might be cashed by GOP.
The Chinese companies are taking a huge risk to develop a coal-fired project under such a tight timeline. Therefore, the projects need more understanding rather than groundless accusations.
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