Wapda opposes competitive trading regime: Generation licence case
By Our Staff Reporter
ISLAMABAD, May 6: The Wapda on Tuesday opposed a Competitive Trading Arrangements (CTA) regime for electricity till the expiry of 25-year power purchase agreements (PPAs) signed with the Independent Power Producers (IPPs).
The Wapda stated these views on two similar applications seeking generation licences here at the public hearing conducted by National Electric Power Regulatory Authority (Nepra).
The utility contended that PPAs signed by IPPs with Wapda should continue to be in place for a period of 25 years or so as envisaged under the agreements.
The Wapda representative submitted that the utility has sustained huge losses in the initial years of agreements by purchasing the electricity from IPPs at 6 cents per units and were required to sell their product to Wapda on cheaper rates in the later years.
He asked why the power utility be deprived of taking the advantage of lower rates by purchasing the power under PPAs instead of CTA regime when it had suffered at the time of high rates.
The Nepra panel led by Nepra acting chairman Sardar Mohammad Sharif and comprising members Mansoor Elahi, Fazlullah Qureshi and Abdul Rahim were hearing two identical applications of Habibullah Coastal Power Company Limited and TNB Liberty Power Limited for generation licences.
However, Wapda representative endorsed the Competitive Trading Agreement (CTA) regime in future, as it would be in the interest of end consumers but after the termination of the PPAs, which Wapda inked with IPPs in 1994.
The legal counsel of IPPs Khaliq Zaman stressed that competitive trading arrangement (CTA) is not part of 1994 policy and to satisfy investors of over 3000mw capacity, IPPs should not be the part of Competitive Trading Arrangement.
The Wapda representative said that duration of generation licence should be of 5 years, which should be extended only after after reviewing the progress of the IPP in generating electricity. However, Wapda said that the term of generation licence should not be according to Power Purchase Agreement duration.
Pakistan Electrical Power Company’s representative Salman also endorsed the view of Wapda saying that the term of power generation licence should be more than five years.
The legal counsel of IPPs Khaliq Zaman submitted that duration of generation licences should not only be consistent with PPA, but if the plant of generating electricity has the life even after the termination of PPA, the generation licence should also be extended under the same PPA. However, the representative of Habibullah Coastal Power Company Limited stressed that terms of the generation licence should be for the whole period of PPA.
Nepra Member Abdul Rahim said in that case the IPP would have to move Nepra for new generation licence under the new laws, which the regulator would have at that time after the PPA duration is elapsed.
The representative of Liberty Power Generation Company said that it has the PPA of 25 years duration with Wapda and in case gas supply is not provided as promised in PPA then Liberty Power Generation Company would not be able to generate electricity.
What would be the fate of the IPP in this case, the representative of Liberty Power Generation Company asked from Nepra.
Nepra member said that government has guaranteed under Implementation Agreement to IPPs, which run on gas that they would be given the smooth supply of gas for 15 years.
However, the government has also given the comfort letter to such IPPs saying that after the 15 years period they would also be provided gas up to the durations of their respective PPAs. On the question of the application of Rules as amended from time to time, IPPs showed no objection to it, saying their security package should not be hurt while introducing any change in rules. However, PEPCO representative said that keeping in view the interest of the purchasers and consumers, changes in the rules should be made.
To a question raised by one IPP’s representative, Nepra Member Abdul Rahim said that if any IPP wants to enhance the installed capacity of power generation that can be allowed, but under new policy of 2002.
