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Nepra seeks explanation for Nandipur plant closure

Updated November 25, 2016


ISLAMABAD: The Nandipur power project appears to have become a somewhat permanent headache for the government which was asked on Thursday to explain why the 425-525MW power plant had not produced electricity since June.

At a public hearing on Thursday, Himayatullah Khan, vice chairperson of the National Electric Power Regulatory Authority (Nepra), ordered a written explanation from the Ministry of Water and Power and the Northern Power Generation Company Limited (NPGCL) as to why the plant had remained closed for so long. The regulatory body also approved a Rs2.60 per unit cut in electricity rates for a month.

A team of Central Power Purchase Agency (CPPA) officials, led by Mohammad Ilyas, its general manager, told Mr Khan that the plant had been closed for inspection.

The Nepra vice chairperson responded by saying that such a big power plant could not be shut down for so long on the pretext of inspections, adding that the regulator would like to know why it did not contribute power to the grid.

He said it had come to the regulator’s knowledge that the plant had been partially dismantled by its Chinese contractors in June. The Nandipur project’s inability to produce electricity had caused a loss of billions of rupees to the nation, he said.

Responding to a question from a journalist after the hearing, Mr Khan said the regulator could impose a penalty on the generation company concerned on the basis of written responses from the government and the company.

The Nandipur power project has attracted controversy ever since the plant’s installation was delayed during the Pakistan Peoples Party-led government when the Chinese contractors demobilised and the machinery remained stranded at the ports. The Pakistan Muslim League-Nawaz government revived the project but, by then, its cost had risen from Rs42 billion to over Rs65 billion. The power plant has faced a series of operational hiccups during and after launching its commercial operations. During the two government tenures, the project continued to attract a series of court cases, inquiries, investigations, audits and political and commercial disputes.

At the hearing on Thursday, Nepra expressed concern over the use of expensive fuel at power plants despite the availability of cheaper alternate fuel. The case of Kot Addu Power Plant was highlighted as part of the power plant runs on diesel, even though it could be operated on regasified liquefied natural gas (RLNG).

The regulator also called for an explanation from the Ministry of Water and Power for not notifying reductions in base tariff for distribution companies announced by the regulator in January this year, for the financial year 2015-16. Mr Khan said because of the delay in notification, consumers had been at a huge financial disadvantage.

Nepra then ordered all distribution companies (except K-Electric) to refund Rs2.60 per unit to consumers for electricity consumed in October. The Rs20 billion refund would not apply to agricultural tube-wells and domestic consumers using less than 300 units per month.

Distribution companies charge a higher estimated fuel charge to power consumers which is later adjusted against the actual cost in the subsequent month, with the approval of the power regulator.

The CPPA claimed that it had sold an approximate 9.5 billion electricity units (kilowatt hours) to consumers in October 2016, at a total cost of Rs40.27 billion. The power companies had charged reference fuel charges of Rs7.34 per unit to consumers, while the actual fuel cost turned out to be Rs4.74 per unit, hence the refund.

The CPPA reported that the highest contribution to power generation – almost 32 per cent (2.76 billion units) – came from hydropower plants which had no fuel cost at all. On the other hand, the cost of furnace oil-based power generation was Rs7.96 per unit, which had contributed about 30.3 per cent (2.63 billion units) of the total electricity generation in October.

Likewise, the cost of operating gas-based plants for 2.1 million units or (24.4 per cent of total generation) was around Rs5.5 per unit, while power production from RLNG had a two per cent share at an average cost of Rs6.7 per unit.

The fuel cost of diesel-based plants was reported to be Rs12.11 per unit with a generation share of about two per cent. The cost of generating power from coal-based plants was worked out at Rs4.5 per unit with a negligible contribution of less than 0.2 per cent. Nuclear power plants contributed about five per cent of the total power at a cost of Rs1.16 per cent.

Published in Dawn, November 25th, 2016