Energy squabbles


WEB DESK: A rising conflict has been evident for sometime between different institutions dealing with the poorly-managed power sector. The most recent spat is between National Electric Power Regulatory Authority (Nepra) and Ministry of Water and Power. It relates to the latter’s accusations that undue delay in multi-year tariff determinations for power distribution companies was the reason behind the delay in the implementation of Prime Minister Nawaz Sharif’s announcement in Karachi during the last week of 2015 that tariff would be reduced by 3 rupees per unit effective January 1 for industrial users. The Prime Minister’s objective: to rejuvenate flagging exports of the country.

Punjab Chief Minister Shahbaz Sharif recently lashed out at Nepra for delaying tariff applications for new power plants with Sindh government requesting deferment of grant of the license till related matters are deliberated at the forum of Council of Common Interest (CCI). The CCI mandated by the constitution to be held once every three months has not met for over nine months and several matters relating to energy imports remain pending. It may be recalled that Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi has repeatedly justified signing a contract for LNG import from Qatar without calling a CCI meeting as requested by Sindh on grounds that it an imported commodity and hence within the federal government’s purview.

Shahbaz Sharif maintains that Nepra’s delaying tactics are the reason behind the delay in the establishment of RLNG-fired 1000-1500MW Quaid-e-Azam thermal power plant (QATPL) at Bhikki, Sheikhupura. The Chief Executive Officer of QATPL in a Nepra public hearing argued, among other things, that as RLNG is a fuel and not natural gas Nepra is not empowered to discuss the issue in a public hearing. By 9th February 2016, Nepra decided that after analyzing available information the three proposed projects, including QATPL wholly-owned by the Punjab government and two by the federally-owned National Power Management Company (Pvt) Limited, with different capacities, costs and thermal efficiencies necessitate different tariffs.

Nepra, in turn, has expressed serious reservations against Central Power Purchasing Agency (CPPA-G), National Transmission and Despatch Company (NTDC) and National Power Control Centre for overburdening consumers by preferring diesel-fired Independent Power Producers (IPPs) over less expensive power plants. And recently in a written response to the Senate following the filing of adjournment motions, Nepra maintained that “the administrative functions (including the release of consumer bills) were being performed by the chief executive officer and were monitored by the board of directors of the respective distribution companies; however, the Ministry of Water and Power cannot shirk its responsibilities.”

Other inter-institutional issues include delays in payment of overdue amounts, interest and late payment surcharge with Saif Power (IPP) urging NTDC to pay 2.198 billion rupees owed to it. Nepra has sought a reply from CPPA and NPCC for purchasing expensive electricity from four HSD-fired IPPs that include Saif Power. And to complicate matters further 9 IPPs have sought international arbitration for recovery of 11 billion rupees from NTDC in accordance with the judgement passed by the court.

Although there have been some improvements in the power sector, acknowledged by the Fund in its ninth review under the 6.64 billion dollar Extended Fund Facility, including improved load management and capacity utilisation owing to improved fuel mix and management of generation, improved recoveries and lower line losses; but the review stated that “power deficit has been a major constraint on growth in the past decade. Utilising less than 70 percent of installed capacity Pakistan’s cash-strapped power sector has been unable to meet the growing demand for electricity resulting in widespread outages affecting both businesses and households.”

To conclude, there is an emergent need to strengthen the reforms agreed with the Fund and other multilaterals and seek to promote co-ordination as opposed to conflict between the different entities operating in the sector.

Source: Business Recorder