ISLAMABAD: To benefit the influential industrialists by ensuring additional tariff for New Captive Power Plants (NCPPs) at the cost of power consumers, water & power ministry has now sought from the National Electric Power Regulatory Authority (Nepra) to suspend its earlier decision, as it was unlawful whereas the regulator has admitted the ministry's plea for hearing.
Documents made available with this scribe disclosed that Secretary of the Water and Power Sikandar Ahmed Rai on March 8 requested the regulatory authority (Nepra) for reconsideration of the Authority’s intimated tariff determination dated 09-01-2013 under Section 31 of the Nepra Act, in respect of various NCPP Plants.
Since few high profile personalities owned these NCPPs of their industrial units so Nepra is under extreme pressure and if it (Nepra) succumbed to political influence and withdraws its earlier decision about NCPPs tariff then it would also be a new mega scam worth in billions also similar to Rental Power Plants (RPPs) the scam as power purchase agreements and tariff was set without seeking the approval of Nepra despite the fact that prescribing tariff by government or any government agency other than Nepra is inconsistent with the section7(6) and 12 of the Nepra Act.
And, despite provision of precious and scarce gas, old and outdated machinery's plants were installed in the nine industrial units of mighty influential millers. Among these millers one beneficiary was the husband of former foreign minister Hina Rabbani Khar.
The influential industrialists had been benefited through 20 years long agreements of NCPPs with distribution companies (Discos) at the cost of over burdened power consumers already bearing heavy brunt of sky-high power tariff for a long time.
Similarly, Discos while paying no heed to the pre-requisite of advance Nepra approval inked agreement with industrialists, making sheer mockery and violation of relevant laws and procedures as well.
According to documents, ministry of water & power while backtracking from its earlier stance had now requested the regulatory authority to reconsider its determination dated January 9 being not in accordance with the applicable Nepra laws and allow the purchase energy from the NCPPs on the tariff/terms and conditions enumerated in the sale and purchase agreement which these NCPPs have already executed prior to February 2012.
However, the regulator has declared the ministry's request admissible for the hearing.
Ministry official said though Nepra's earlier decision pertaining tariff determination of the tariff of NCPPs was in the light of Water and Power Ministry's proposal yet the ministry and Pakistan Electric Power Company Private Limited (Pepco) after the transfer of Water and Power Secretary Ms Nargis Sethi have surprisingly withdrawn from its earlier stand and adopted double standards by seeking revision in the determined tariff.
Under Nepra Act section 31(4), the ministry can submit its review petition to the Nepra within fifteen days and also the Nepra is to take a decision within fifteen days yet in this case the ministry had sought revision on March 8 after almost a two-month delay, sources added.
Interestingly, Nepra Act section (31) 4 Regulation of Generation, Transmission and Distribution of Electric Power Act (XL of 1997) also said," Provided that the Federal Government may, as soon as may be, but not later than fifteen days of receipt of the authority's intimation, require the authority to reconsider its determination of such tariff, rates, charges and other terms and conditions.
Whereupon the Authority shall, within fifteen days determine these anew after reconsideration and intimate the same to the Federal Government."
Earlier in December 2012, the ministry of water & power in its written stance submitted to the Nepa said operation and maintenance (O&M) cost has to be substantiated through the actual audited costs of the plant instead of fixing the cost without any basis and utilization of gas allocation may not be wasted on single cycle, low efficiency plants.
And, it is advisable to use the pipeline quality gas allocation in more efficient, bigger plants like Orient, Sapphire or Hallmore. While the cost of generation in these plants shall be lower than the proposed smaller plants.
Secretary water & power Sikandar Ahmad Rai in its request pertaining tariff of NCPPs has also blamed the Nepra over approving a policy on NCPPs in 2012. The request also said under Nepra Act section 31, the regulator is not mandated to determine the tariff and 9th January decision was the violation of Nepra rules.
They said the ministry in its plea had also sought grant of permission pertaining the mutual power purchase agreements between power Discos and power plants while the Discos cannot violate the agreements with NCPPS owners.
Power Ministry, All Pakistan Textile Mills Association (Aptma), Water and Power Development Authority (Wapda), and Pepco hands in glove with each other in 2009 had mutually fixed the tariff of 124 MW NCPPs when former Prime Minister Raja Pervez Ashraf was the Minister for Water & Power.
And, Wapda's Member Power played a role in setting the tariff rate. While no approval even consultation was taken with National Electric Power Regulatory Authority (Nepra) on this policy and agreements of NCPPs with Discos about PPA.
Faisalabad Electric Supply Company (Fesco) inked deal with M/s Galaxy Textile Mills, Jhang, which is owned by the husband of incumbent Foreign Minister Hina Rabbani Khar and is a defaulter of Fesco amounting to the tune of Rs 70.246 million.
While Hyderabad Electric Supply Company (Hesco) signed agreement with Lucky Cement Limited, touted as the largest producer and leading exporter of cement in Pakistan operates under the umbrella of Yunus Brothers (YB) Group which is an internationally recognised group having business concerns in varied sectors such as cement, textile and energy not only caters to the local market but is also one of the chief export houses of Pakistan.
Hesco, a power distribution company located in Sindh province inked deal with Omni Power, Thatta Power Limited and with Anoud Textile Mills Limited (ATML) while Sukkur Electric Power Company (Sepco) made agreement with Naudero, Dawood Energy and with Shikarpur Power (Pvt.) Limited (SPPL).
Nepra were of the view that Discos are not authorized to ink deal with NCPPs without taking advance approval from the regulator but these power plants are supplying electric power to the system from last one year and Nepra is provisionally approving their fuel cost only.