I REFER to the article “Electricity crisis and the circular debt” (April 30). It has been mentioned in the article that the present installed capacity is about 21,000 MW but the generation or production is only 9,000-10,000 MW due to which there is loadshedding all over the country. My question is: why power-generation companies do not generate power to meet the peak demand of 15,000 MW when they could easily do so and thus prevent loadshedding?
After doing a bit of study/research, I have found out what could be a plausible reason to the above. There are 16 private power- generating companies called Independent Power Producers (IPPs) which sell power to nine power distribution companies called DISCOs, who then supply power to consumers.
The DISCOs are under the control of one company called National Transmission and Despatch Company (“NTDC”). NTDC purchases power from DISCOs under a two-part tariff consisting of capacity and energy prices, as follows:
i) Capacity Purchase Price (CPP): The payment against this tariff component is independent of actual supply of power and covers: fixed operation and maintenance, O&M, cost, the insurance cost, the administrative cost, the debt-service cost, and a reasonable rate-of-return on equity investment.
ii) Energy Purchase Price (EPP): The payment against this tariff component covers cost of fuel and variable O&M. This component is paid based on the actual power supplied from the power plants.
The above tariffs are variable and are dependent on currency exchange rate, inflation of rupee, fuel price variation, duties and taxes, force majeure events and technical limits.
The most noticeable feature of the above-mentioned tariffs is the Capacity Purchase Price tariff component. According to this tariff, the power-generating companies will pay even if they do not generate power.
Hence, the IPPs earn money by just installing their plants and without operating it, i.e. a return on their investments. But they have to keep the plant in a fit condition — with lubricants, fuel and manpower — to start the plant instantly whenordered by the NTDC. The IPPs could earn more profit through EPP, the second part of the tariff component by operating the plant. But many are satisfied with the profits they earn by keeping their plants idle. This is good business, earningsomething for nothing.
The NTDC has the option of ordering which IPP should operate its plant in order to meet the power demand as it rises. But there could be likelihood of collusion between these two parties to split the profits by keeping the plant non-operational. Ifthis is so, then it is indulging in a sort of corruption.
But then who are the sufferers due to non-operation of power plants? Indeed the public, as they have to face loadshedding.The government and NTDC should look into this and rectify the situation.
ABDUL RAHIMKarachi