ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has approved an increase of Rs4 per unit in Discos tariff for April 2022 under monthly Fuel Charges Adjustment (FCA) mechanism to recover an additional Rs51 billion from inflation-hit consumers in bills of June 2022.
The Authority is already under criticism at different forums for deliberately announcing tariff rebasing determinations of Discos at a time when coalition government led PML (N) succeeded PTI led government through a no confidence motion despite the fact that the IMF, World Bank and ADB have expressed their reservations for this delay.
The Authority conducted public hearing May 31, 2022 during which the officials of CPPA-G, National Power Control Centre (NPCC) and National Transmission Despatch Company (NTDC) were quizzed on different accounts.
NPCC/NTDC during the hearing explained operation of power plants on RFO, however, the Authority observed that an in-house analysis has also been carried out to work out the financial impact due to deviation from EMO based on the information submitted by NPCC.
As per the in-house analysis/workings carried out, the net amount deductible, on provisional basis, from the overall claim due to deviation from EMO is Rs580 million (Rs578 million financial impact due to system constraints and Rs2 million due to underutilization of efficient power plants).
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The Authority decided to deduct this amount provisionally in the instant FCA, until NPCC/NTDC and CPPA-G provide the required details along-with complete justification in this regard to the satisfaction of the Authority. During the hearing, CPPA-G and NPCC also agreed to revise the EMO list that is posted on their website to exclude the RFO, Gas and RLNG power plants which are not supplying energy to CPPA-G due to lack of availability of fuel.
Further, while reviewing the FCA claim, the Authority observed that Partial Load was provided to Baloki, QATPL and Huaneng Shandong Ruyi (Pakistan) Energy (Private) Limited (HSRPEL) power plants even during Forced Outages and Failure to Achieve Despatch (FADL), which is non-performance/fault of the said power producers.
The Authority is of the considered view that Part Load can only be provided if the Plant is available but NPCC despatches it on part load due to system requirements. Similarly, Part Load cannot be provided in the case of Failure of the plant to achieve the Despatch instructed by the NPCC. Therefore, an amount of Rs85.702 million (Rs16.796 million for QATPL, Rs68.547 million for Balloki and Rs0.359 million for HSRPEL) for the month of March 2022 has been deducted on account of Partial Load charges, while working out the FCA of April 2022.
The Authority from the information/data submitted by CPPA-G and NTDC/NPCC observed that the first most efficient RLNG power plants in Pakistan power sector are the Quaid-e-Azam Thermal Power Plant (QATPL), two power plants of National Power Parks Management Company limited at Haveli Bahadur Shah (HBS) and Baloki; efficiency of these power plants is above 61 percent. It is encouraging that utilization of three most efficient RLNG power plants has increased: QATPL is around 77pc, HBS around 84pc and Baloki around 80pc.
Although their utilization factors have increased but still the accumulated claim by these power plants against part load operation is Rs1.74 billion. In the wake of high load demand in the system and ongoing electricity shortfall in the country, the full utilization of these power plants could minimize load-shedding through generation of electricity by cheaper resources on one hand while on the other hand it could help avoid part load charges of Rs1.74 billion.
The Authority also noted that the second most efficient RLNG power plants in Pakistan are the Orient, Saif, Sapphire and Halmore power plants; efficiency of these power plants is above 51 percent. The utilization factor of Orient, Saif, Sapphire and Halmore on RLNG fuel was 61pc, 42pc, 43pc and 64pc respectively. Similarly, the utilization factor of Saif Power and Sapphire Electric on HSD was around 16pc and 15pc. Operation of these power plants on part load resulted in part load adjustment charges claim of more than Rs422 million. Like the aforementioned RLNG power plants full utilization of these power plants was also necessary to minimize the load-shedding through generation of electricity by cheaper resources and avoid the part load charges of Rs422 million.
The Authority further observed that the utilisation factor of power plants at Central Power Generation Company limited (CPGCL), including the newly commissioned Guddu 747 machine, remained very low despite availability of dedicated cheaper gas. Low utilisation factor of machines at Genco-II has resulted in operation of costlier power plants. The utilisation of inefficient Genco-I (JPCL) and Genco-III (NPGCL) power plants that too on RFO fuel, while leaving the efficient power plant unutilised or underutilized, was undesirable and resulted in higher Energy Purchase Price (EPP) during the month. Similarly, the use of HSD in operating dual fuel Sail Power, Sapphire Electric, KAPCO Block-I and KAPCO Block-2 power plants was undesired and has resulted in increased EPP during the month. The per unit cost (Rs/kWh) as well as the utilization factor (%) of various thermal power plants clearly indicate the need for better management to improve the situation of electricity generation and cost control within the available resources.
The Authority considers that importance should be given to improve the planning by NTDC i.e. accurate (best possible) estimation of RLNG requirement that too well before time and operation of the power plants in strict merit order to reduce the burden of higher EPP.
The Authority further noted that currently, the fuel cost adjustment is determined with a lag of one month, the FCA for the month of April 2022 is being determined in June 2022. The FCA, either upward or downward, has huge financial impact both for the power sector as well as consumers and must be passed on as early as possible to ensure the revenue recovery for Discos and benefit to consumers in case of downward adjustment. Therefore, efforts must be made by CPPA-G to submit FCA data immediately after the month for early determination by the Authority.
The Authority, after incorporating the aforementioned adjustments, has reviewed and assessed an increase of Rs3.9923/kWh in the applicable tariff for Discos on account of variations in the fuel charges for the month of April 2022.
Member Sindh, Rafique Ahmad Shaikh, in his dissenting note stated that as per the data submitted by NPCC, the average RLNG allocated to power sector during the month of April, 2022 was 552 mmcfd against a demand of 690 mmcfd that resulted in indicative financial impact of Rs2,379 million during the aforesaid month.
During the FCA hearing of Discos for the month of April, 2022, the reason for not utilising the efficient RLNG power plants appears to be non-availability of RLNG. One reason for shortage of RLNG was lesser demand by NTDC/NPCC i.e. requisition of around 690 mmcfd against the actual demand of around 800 mmcfd (as apprised by the system operator to the Authority), the other reason is less supply of RLNG by concerned quarters against the demanded quantity of RLNG.
Efforts should have been made to improve the supply chain of RLNG to fully utilise the most efficient RLNG power plants and avoid the part load adjustment charges. As the RLNG is imported fuel and its availability can be ensured through better supply chain management, accordingly, such mis-management into the availability of required RLNG can not be passed on to the consumers.
Copyright Business Recorder, 2022
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