Inside Financial Markets

Govt likely to bound energy investors to lay transmission lines

Government is mulling a proposal to pass on a responsibility of laying power transmission line to the energy investor in order to share the cost as well as accelerate pace of a project’s execution, sources said on Saturday.

The sources said the new mechanism will bound new power producers to lay transmission line from their own resources to connect their projects with the nearest grid network.

They said the power ministry and the National Transmission and Despatch Company (NTDC) may formally take up this issue with the relevant authorities within the next couple of weeks.

“Actually, it is a principal responsibility of a (power) developer to ensure connectivity with the national transmission network as per the regulations,” said a source, having knowledge of the country’s energy sector rules.

More than dozens power projects are under construction. The government envisaged the development of around 17,000 megawatts of power plants as early harvest projects under the $57 billion-China Pakistan Economic Corridor by 2018.

And, NTC is executing every project. The company is burdened with the herculean task of connecting all of these projects in succession in a short span.

The source said the government earlier decided to connect under-construction power projects with the grid through NTDC in a bid to meet demand and supply gap.

The NTDC’s management, therefore, was tasked to lay transmission lines to the far flung areas, including Thar. The company has already erected transmission lines for linking several under construction power projects.

Sources said the company would continue to lay main transmission lines across the country for augmentation purposes in addition to strengthen the system’s backbone.

According to the new proposal, the official said each new power producer would be bound to bear the cost of transmission line, which will later be handed over to NTDC as operation of such infrastructure is not easy for power developer/producer.

Sources said such arrangement of sharing responsibility of laying transmission lines makes sense and is a logical solution to the growing cost of power transmission.

They said the procedural delays due to peculiar nature of official working environment always hinder work badly.

The contract awarding process for a transmission line requires close to one year. Moreover, there is also a dearth of required human resource, they added.

Official said a little work on reforming the process has been done. A workable solution of this problem is to assign responsibility to developer/power producer to take steps for power evacuation. Such arrangement would tend to smoothen the synchronisation of a newly produced power with the ultimate consumers, allaying apprehension of paying capacity charges due to delay in laying of the transmission lines.

Sources said the proposed arrangements would result in increasing cost of new power generation projects, putting an extra burden on new investor.

They said investors may initially consider this as a negative development. However, it seems that such arrangement would be a logical step and may result in timely execution of associated transmission line project, they added.

Baqar Hussain

A Wannabe CFO, just had stepped in the corporate sector, willing to explore every aspect here and learn as mush as i can, awareness for those who dont, get the info where ever possible and stay up to date always.

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)