Power projects: Cabinet Division, Ministry lock horns over summary

Cabinet Division has reportedly locked horns with Ministry of Water and Power over a summary tailored to set up on-site power projects (renamed rental power projects) based on an interim gas supply, well informed sources in Cabinet Division told Business Recorder on Tuesday. The summary is to be considered by the Economic Co-ordination Committee (ECC) of the Cabinet for which an ECC meeting has been delayed, the sources added.

“We have made it clear to the Ministry of Water and Power that the summary cannot be placed before the ECC until comments of other stakeholders are received,” the sources continued. Private Power Infrastructure Board (PPIB) whose Managing Director is in jail for his alleged role in M/s Karkey Rental Power Plant, has refused to prepare the summary on the basis of treatment meted out to its MD, saying that such projects should be established by individual Discos and not the federal government.

Sources close to Secretary Petroleum told Business Recorder that the proposal has jointly been prepared by the Ministry of Petroleum and Natural Resources and Ministry of Water and Power which is aimed at utilising 200 Million Cubic Feet Per Day (MMCFD) of natural gas available to various gas fields and cannot be injected into the pipeline system in the near future due to a variety of reasons. “Petroleum Ministry has offered 200 MMCFD gas for power plants at well head so that projects can materialise as early as possible,” the sources continued.

According to Petroleum Ministry sources, gas will be available from six months to three years at producer prices between $2.5-6.0 per MMBTU depending upon applicable Petroleum Policy. Cabinet Division, sources said, has gone through the summary sent by the Ministry of Water and Power and found several shortcomings in it. In March this year, the ECC approved revival of the RPPs under the new name of Short-Term Independent Power Plants (STIPPs) titled “Utilisation of the existing available generation capacity – short-term IPPs.”

Water and Power Ministry in its summary has argued that those RPPs which will get clearance from the NAB will become short-term IPPs and then they will get tariff and generation licence from Nepra to generate electricity. However, National Electric Power Regulatory Authority had resolutely opposed the proposal, arguing that it violated rules.

According to sources in Cabinet Division, in the instant case, Ministry of Water and Power intends to give powers to distribution companies (Discos) to select a power generation company on the lowest tariff through a competitive bidding process but the question remains as to who will monitor the bidding process. “We have to follow instructions of Chairman ECC with regard to consultation process on each summary. This summary cannot be tabled until comments are received from other stakeholders, including Law Ministry,” the sources concluded.