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Nepra issues notices to three Wapda companies

November 23, 2011

A Turkish ship carrying a rental power plant.—File Photo

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has issued show-cause notices to three Wapda companies for failing to terminate contracts of those rental power projects which could not meet production deadlines — a development that can entail revocation of licences.

The notices have been issued to the Northern, Central and Lakhra power generation companies which were dealing with the 201MW Reshma Power Generation, Guddu Rental Project and 232MW ship-mounted Karkey Karadeniz Elektrik Uretin of Turkey.

The information was placed before the Supreme Court on Tuesday during hearing of the rental power plants (RPPs) case. The notices have been issued under Sections 28 and 29 of the Regulation of Generation, Transmission and Distribution of Electric Power Act of 1997.

Under the act, the authority reserves the right to suspend or revoke a power generation licence and impose a penalty of Rs300,000 or more for each violation of an agreement per day.

“Whereas time was of the essence and all the RPPs were required to be commissioned within the stipulated period and upon failure to install the projects by the due date the contracts should have been terminated. You (generation companies) had been amending those contracts by adding clauses which are detrimental to the rights of the consumers and had such modification been in the knowledge of the authority (Nepra), the tariff would not have been approved,” the notice said.

None of the three rental plants invited to bridge the power shortfall in the country could achieve the commercial operation date in accordance with the licence agreements despite the payment of advance mobilisation funds.

Representing former water and power minister Raja Pervez Ashraf before the two-judge bench, Waseem Sajjad defended the RPP initiative, saying there was no mala fide or ill will in attempts to reduce the gap between electricity supply and demand by resorting to such short-term measures.

The lawyer said the RPPs had been invited as an emergency measure to reduce the misery of the people caused by power shortage. The programme was an attempt to procure power from the private sector on an urgent basis.

“It was originally conceived to be a fast-track implementation to quickly lessen the gap between supply and demand,” he said in a statement.

“The country is facing a power crisis and will continue to do so. Urgent measures are needed to bridge this gap in a meaningful and effective manner in the national interest.”

He said the need for RPPs had been recognised before Raja Pervez assumed the office of minister. The decision to approve acquisition of RPPs was taken for the first time by the Economic Coordination Committee on Aug 12, 2006, nearly two years before he took office.

When the present government took office, the general public, industry and agriculture were being severely affected by continuous power shortage. It was a political as well as an economic issue, he said.

The former minister said he had been informed that the country was facing a power deficit of 5,000 megawatts for the next two years, which was likely to rise afterwards.

The spurt in GDP growth during 2005-07 had increased the demand for energy beyond any expectation, the statement said.