ISLAMABAD, May 14: The government has overruled power regulator’s reservations and has granted about five-month extension to the existing independent power producers (IPPs) to set up three fresh thermal projects of about 400-500 MW at a tariff exceeding 11 cents per unit, it is learnt.
Informed sources told Dawn that a recent meeting of the Economic Coordination Committee (ECC) of the cabinet had allowed the Private Power and Infrastructure Board (PPIB) to sign agreements with these IPPs on the basis of their bids that offered tariff at 11.11 cents per unit.
Under the original plan, Kohinoor Energy and Japan Power were to set up their residual fuel oil based projects of 143 MW and 100-200 MW capacity respectively near Lahore by October 2008 while Tapal Power was to set up a 161 MW project near Karachi. The three companies are already operating comparatively smaller of 126 MW, 107 MW and 120 MW respectively that were set up under the 1994 power policy at an average tariff of 5.7 cents per unit.
The sources said the PPIB had informed the ECC that these projects should be given an extension in commercial operation date (COD) until March 2009 ' instead of October 2008 ' and their tariff offer of 11.11 cents per unit be approved.
The PPIB had also informed the ECC that their tariff was lower than 11.87 cents per unit tariff that the Nepra had allowed to some IPPs through the hearing process under the tariff rules.
The National Electric Power Regulatory Authority (Nepra) had expressed reservations over the tariff on the grounds that power tariffs for these projects should follow tariff rules under the 1997 Nepra Act that envisaged a proper process of public hearing.
The Nepra had opined that the bidding for these projects was allowed as a special case and was subject to their commercial operation by October 2008 to overcome shortages on a fast track basis.
It said since the objective of "fast track development" had not been achieved, they should be asked to follow normal procedure of tariff setting through public hearing.
The Nepra believed that the three sponsors already had their infrastructure available and it was just capacity addition at the existing site which meant that their tariffs could come down by slicing some of the elements of tariffs which they were charging through their existing plants.
Led by Prime Minister Shaukat Aziz, the ECC, however, overruled the Nepra’s reservations and allowed the PPIB to sign implementation agreements with the three sponsors so that they are able to immediately start construction of the expansion projects and start commercial operation by March 2009.
Meanwhile, a government spokesman said on Monday that the country currently faced a gap of about 800 MW between demand and supply, which may not cross the figure of 1,100 MW during the peak summer season, according to latest actual projection.
The spokesman said due to better management, reduction of forced outages in generation companies and energy conservation measures, the power deficit may not exceed 1000 to 1,100 MW during peak hours.
