ISLAMABAD: The government on Monday was blamed for discriminating against 53 private sector projects by extending preferential treatment to 1,263-megawatt LNG-based power project of the Punjab government.

In a dissenting note on the determination of the regulator approving Trimmu-Jhang-based project, National Electric Power Regulatory Authority (Nepra) Member Tariff Himayat Ullah Khan wrote, “I feel it is my duty to point out the discriminatory attitude of CPPA-G while dealing with other projects”.

He said the rationale for allowing a preferred project may be valid but the same justification was equally valid on generic basis for all other project, equally entitled to be treated accordingly “but have been discriminated against”.

He also specifically enumerated a total of 53 projects having a total capacity of about 1,547MW which he said had been discriminated against.

Mr Khan explained that the justification for “must-run” or “take-or-pay”-based tariff for the Jhang-based project given by the Punjab government and the Central Power Purchasing Agency-Guarantee (CPPA-G) was that it was within the provision of the applicable power policy and its bankability was based on a guaranteed/firm commitment of dispatch of power.

He said the two questions whether the project will add to surplus capacity and whether capacity payments would be made for the idle capacity were important to be examined.

The petitioner for the project — Punjab Thermal Power Company — claimed that due to its low tariff the project will lead to a reduction in the basket price of electricity and will also be high on the economic merit order and hence will not be ‘directly receiving any idle capacity payments’ and that CPPA-G was the right agency to address the issue of surplus capacity.

In response, the CPPA-G said that it had segregated all its generation plants into two categories of ‘committed’ and ‘non-committed’. The Trimmu LNG project had been placed in the category of committed and will therefore not add to surplus capacity.

“This is a very vague, general and invalid statement,” wrote Nepra’s member tariff. He added that no details were provided nor the two terms defined but yet it was given a very categorical conclusion that the project will not add to surplus capacity.

Mr Khan also noted that ‘Power Balance up to 2025’ preliminary report submitted in June 2017 by National Transmission and Dispatch Company (NTDC) – a sister company of CPPA-G – painted a different scenario i.e. significant visible gap between demand and supply of power generation in the immediate future.

He said the government would need to take appropriate remedial measures in retiring some of the old or less efficient public sector plants and independent power plants to avoid falling into an “excess capacity trap and making avoidable idle capacity payments, thereby, addressing the issue of increase in the circular debt”.

He put on record that a total of seven small hydropower projects — two in Azad Kashmir and five in Khyber Pakhtunkhwa — with a combined capacity of 101MW had been given consent on ‘take and pay basis’ on May 2017. Another seven projects — three in KP and four in Punjab – with a combined capacity of 33.35MW were awaiting consent by the power purchaser and all had been discriminated against.

Published in Dawn, January 23rd, 2018