IPPs expansion project allowed on 88 percent capacity availability

The Private Power Infrastructure Board (PPIB) has agreed not to force the independent power producers (IPPs), interested in capacity expansion, to function at 90 percent annual availability, especially for plants running on furnace oil.
Sources in PPIB told Business Recorder on Wednesday that the National Transmission and Dispatch Company (NTDC) has also ''stamped'' the decision, saying that it would have put further financial burden on the consumers.
Sources said that the Economic Co-ordination Committee (ECC) of the Cabinet had decided on May 29, 2006 that "project-specific negotiations be conducted by PPIB under the umbrella of security documents, with the approval of the Board. However, in case of any deviation from the policy, or an increase in GoP''s financial and contingent liability, the matter be placed before the ECC for approval".
According to sources, PPIB was expecting that most of the new thermal IPPs would use gas as fuel. Accordingly, one of the key improvements from the security documents of the 1994 policy was increase in annual availability from 86 to 90 percent.
During negotiations on security package, power generation projects based on ''Combined Cycle Gas Turbine'' (CCGT), using gas as primary fuel, had agreed to the increased annual capacity availability of 90 percent, sources said.
However, almost all of the IPPs, interested in capacity expansion of their existing facilities, and the leading business houses, both part of GoP''s initiative to enhance the power generation capacity on fast track basis, asked the PPIB that annual capacity availability of 90 percent would be too high for the reciprocating plants running on furnace oil. The IPPs were of the view that this binding would significantly increase the operation and maintenance (O&M) cost of the power generation facility, which would ultimately translate into increase in consumer-end tariff, sources said.
While most of the IPPs are still insisting on 86 percent capacity availability, in line with the 1994 agreements, the PPIB argues that 88 percent availability should be economically viable.
According to sources, PPIB also obtained power purchaser, NTDC, point of view, which said that ''diesel plants can achieve 88 percent availability without any additional cost, but in case of furnace oil, O& M cost would increase.
The PPIB in its meeting discussed the issue, and allowed minimum annual availability of 88 percent for power plants based on reciprocating engines, running on furnace oil, in the light of technology to be used in expansion, sources added.