Key federal entities oppose grant of licence to KP company

Published January 25, 2021
The company seeks to operate about 7,300MW of power supply system in the province over a period of five to 10 years. — AFP/File
The company seeks to operate about 7,300MW of power supply system in the province over a period of five to 10 years. — AFP/File

ISLAMABAD: The Central Power Purchasing Agency and the National Transmission & Despatch Company — both key federal entities — have opposed transmission licence to the Khyber Pakhtun­khwa Transmission and Grid System Company (KPTGC) that seeks to operate about 7300MW of power supply system in the province over a period of five to 10 years.

In response to comments sought by the National Electric Power Regulatory Authority (Nepra) from stakeholders over the KPTGC’s request for grant of provincial transmission licence, the Punjab government has, however, supported the request while demanding that the proposed licence should ensure provision of minimum technical and human resource capital as and when required and the provincial transmission company should provide open access and participate in the wholesale electricity market.

The CPPA, which looks after the financial matters relating to power purchase from all public and private sources and sales to all distribution companies (Discos), has contended that existing laws allow only one power system operator in the country at one time that was already in place running the national grid in the shape of National Transmission and Despatch Company (NTDC).

It said the KP company had defined its principle business as system operations and scheduling and despatch of the generation plants. “This is in contradiction to the provisions of the Nepra Act,” which provides for a system operator (an entity) to perform the function of system operations and required a mandatory System Operator Licence.

Punjab favours request by KPTGC to run part of national grid

Section 23G of Nepra Act categorically stated “only one such licence shall be granted at any one time”. However, till the grant of such licence, the National Grid Company (NGC) shall perform the function of System Operator as given in Section 18 of Nepra Act.

Moreover, the generation facility connected directly or indirectly to the NGC or Provincial Grid Company (PGC) shall be subject to the economic dispatch as directed by the system operator. Therefore, the PGC will have no control over the dispatch of such generators within its territory.

Also, the application by the KPTGC envisaged power evacuation of approximately 7,320 MW to be available in the next five to 10 years by various hydropower projects. As per Grid Code, the NTDC is mandated to prepare Indicative Generation Capacity Expansion Plan (IGCEP) involving the demand and supply situation of the country. Hence, prior to any commitment with the new projects, endorsement of site, size and technology and timing has to be aligned with IGCEP and Renewable Energy Policy of the federal government.

The CPPA contended that given the fact that IGCEP was pending approval by Nepra, any decision regarding induction of hydropower projects in the system, its quantum and timing should be strictly in line with the IGCEP. Subsequent studies should be done to evaluate which zones are most feasible to bring the hydropower at the minimum levelised cost and maximum firm capacity contribution to the grid.

Likewise, the NGC had the exclusive right of providing transmission services in the whole country under the Nepra law while the function of centralized planning for the transmission network in the country was under the domain of NTDC under Grid Code and Transmission System Expansion Plan (TSEP).

Therefore, the transmission business of PGC is limited to the development, construction and maintenance of transmission facilities approved under TSEP, located in its territory while the Disco would preparing their own sub-transmission plan to be followed by PGC. The role of PGC and like entities should only be limited to the implementation of the approved plans.

The NTDC also opposed the provincial transmission licence to KPTGC saying the Article 154(1) of the Constitution required the Council of Common interests to formulate and regulate policies in relation to matters in Part II of the Federal Legislative List that also included electricity. Therefore, the policy decision would be placed before the CCI.

The NTDC said the grant of licence to a PGC under Section 18A of the Nepra Act would “inevitably lead to interconnection at provincial and federal levels and has to be centrally and carefully planned”, while the two actions of similar entities may clash with each other, causing technical issues. “Either one or both operators may attribute the responsibility of partial or full grid system collapses to each other”.

Therefore, the preparation and prescription of policy framework regarding the integration of national and provincial transmission systems as required under Section 14A of Nepra Act was a sine qua non for the operations of, and/or grant of license to any provincial grid company. Unless such policy framework becomes effective, no licence could be granted to any PGC.

It said the Nepra law also provided that the eligibility criteria for grant of licence as a PGC shall be prescribed, including the minimum solvency and minimum technical and human resource requirements. The significance of a uniform, well thought-out criteria and yardstick for assessing the application and exercising discretion was very important.

The NTDC — the system operator — also opposed the licence to KPTGC saying that the company did not have the requisite experience pertaining to planning, construction and operation of the Extra High Voltage (EHV) grid and transmission as evident from the credentials of officials named by the KPTGC and hence it was not entitled to act as a PGC.

Published in Dawn, January 25th, 2021

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