A wise decision

According to a Recorder Report, the National Electric Power Regulatory Authority has revised the levelised upfront tariff of 11.9713 cents per unit for reciprocating engine technology for a period of 25 years, which is highest ever given to any independent power producer in Pakistan.
However, some departments of the Ministry of Water and Power are reported to have opposed the revised tariff, maintaining that it would neither be acceptable to them nor to the general public. They maintain that Nepra considered the evaluation report which Director Tariff-I submitted on the proposals of leading business houses (LBHs) to the PPIB, which were forwarded to Nepra for consideration so as to revise upfront tariff for reciprocating engine technology and Attock General (Pvt) Limited.
As against this, Nepra is reported to have contended that, taking into consideration the recent determination made in respect of Attock General (Pvt) Ltd, it was convinced that the upfront tariff already determined for reciprocating engine technology called for revision in this case too. Hence, its decision to approve the proposed levelised upfront tariff of 11.9713 cents per kWh for a period of 25 years.
Incidentally, the Attock General Limited is the company which was allowed extension in submission of LoI on the condition that double bank guarantee of the original amount was granted by the PPIB Board.
It will be noted that presently PPIB is stated to be processing 45 projects with cumulative generation capacity of about 11,915 MW at an estimated cost of about $11.2 billion.
Twentysix of these projects, with 6608 MW capacity, are stated to be based on gas/oil, thereby indicating use of reciprocating engine technology, which would appeal to reason, as it should prove instrumental in ensuring uninterrupted power production which is the crying need of the power sector.
It will be recalled that it was only last month that Prime Minister Shaukat Aziz stepped in to facilitate two independent power producers - Fauji Korangi and Western Electric Limited (WEL), with 150 MW capacity each. This was stated to have followed indication of reluctance of the new KESC management to purchase power from them, thereby prompting sponsors of both the IPPs to propose new sites for their projects at Nawabshah.
Moreover, the stance of the KESC management was owed, basically, to hesitation of the SSGC to supply gas at these sites, although it had earlier allocated the fuel for these projects, and which the ECC of the Cabinet had endorsed too. Needless to point out, that the situation thus developing was fraught with grave portents in so far as the challenging task the KESC was faced with in addressing the variously agonising power shortage in the city.
It will also be noted that taking a serious view of a complicated situation worse confounded, the Prime Minister directed Wapda to consider purchase of power generated by these projects. It was, understandably, deemed advisable to thrash it out at a meeting of PPIB, which decided that the gas allocated to these projects be reallocated to other projects.
However, SSGC is reported to have taken the stand that, based on the proposed sites, the new gas pipeline being built from Nawabshah to Karachi would remain un-utilised to the extent of 25 percent, thereby necessitating fresh guidelines from the government to resolve the issue. The PPIB refused to agree with the SSGC's viewpoint, dismissing its claim as unjustified.
Now that the country is facing 1300 MW electricity deficit including 300 MW in Karachi and in the main hubs of demand in Sheikhupura, Faisalabad and Gujranwala, the upward revision of tariff for IPPs using reciprocating engine technology will appear to be fairly justified.