January 27, 2007	Saturday	Muharram 07, 1428

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ISLAMABAD, Jan 26: Taking advantage of severe power shortages the country is facing, five leading business groups have applied for setting up five thermal power plants by 2010 at 12 cents per unit levelised tariff for 25 years, more than double the rate currently being paid to the existing independent power producers (IPPS).

The plants would have the total power generation capacity of about 1000MW.

The National Electric Power Regulatory Authority (Nepra) has accepted for formal proceedings the petitions filed by these groups who are supported by the government for "fast-track development" to cope with power shortages in future. The groups have rejected upfront tariff of 10 cents per unit offered by the Nepra.

A feasibility report approved by the federal government reveals that during normal economic growth the electricity demand at the national level will double in 10 years.

"This means that by 2016 some 15,000MW capacity will be needed," the report said.

Additionally, some of the old thermal generation plants need to be replaced. In such circumstances, the need for new capacity would be in the range of 2,000MW per year, the report noted.Interestingly, the tariffs proposed by these business groups translate into Rs6.5 to Rs8 per unit. At present, Wapda’s average power generation cost is around Rs3.5 per unit and its average consumer tariff is about Rs4.09 per unit.

Under the 1994 power policy, about 15 IPPs are selling about 3,000MW to Wapda and KESC at a levelised tariff of 5.7 cents per unit.

Of the five groups, four have formed a pressure group to get a higher tariff and their petitions have apparently been drafted by the same lawyer as over 90 per cent of the contents and paragraphs are the same.

The government has allowed the four groups to set up their plants "on a fast track basis,” thereby exempting them from pre-qualification, submissions of feasibility studies and issuance of letter of interest (LOI) all needed under the law of the land.The power plants to be set up by these four groups are: (1) Nishat Power Limited, a 200MW project of the Nishat Mills Limited, and it would be an RFO diesel-based project to be situated near Faisalabad. (2) Nishat Chunian Power Limited (NCPL), a 200MW power station based on residual fuel oil diesel, is sponsored by the Nishat Group. It would be set up near Lahore. (3) Gujranwala Energy Limited, another 200MW project based on the RFO diesel, is sponsored by the Gulistan Group and would be located in the Gujranwala district.(4) Atlas Power Limited, a 225MW project of Saquib Sherazi of the Honda Atlas group, would also be based on the RFO diesel engines and it would be set up in the Sheikhupura District.

All the four sponsors have interestingly proposed a tariff of 11.99 cents (Rs7.2) per unit for 25 years on a levelised basis, notwithstanding their different locations and capacities.

These tariffs would, however, be 13 cents (Rs7.75) per unit for the first 10 years and 10.1 cents (Rs6.05) per unit for the next 11 to 25 years.

Another project, the Warda Power Limited, to be situated near Muridke, Lahore, would generate 200MW of electricity and it proposes to sell it at a levelised tariff of 12 cents or Rs7.2 per unit. Its first 10-year tariff has been estimated at 12.7 cents (Rs7.62) per unit and 10.5 cents for the next 15 years.

The project has not been exempted from the feasibility study and pre-qualification conditions needed under the law.