Prime Minister Shaukat Aziz has convened a meeting here on Monday to discuss 'emergency plan for power generation', which the Ministry of Water and Power believes could be materialised by apportioning due share of required power between new IPPs and existing IPPs, an official told Business Recorder on Sunday.
The official said, the ministry would suggest Prime Minister to direct public sector generation companies of Wapda to make investment for two 450 MW combined cycle plants besides IPPs, which have already conveyed their willingness to expand existing infrastructure for additional power.
The ministry was of the view that this would reduce the time spent in arranging financing and tariff negotiations if it was given quick approval by Planning Commission and finances were made available by the government, the official added.
The ministry was of the view that the third combined cycle power plant be installed by private sector (IPP).
The ministry further suggested that for expediting private sector investment for emergency arrangement, innovative approach will have to be adopted to cut out the routine time consumed for this activity, adding that an upfront tariff based on recent determination by Nepra with premium for early commissioning be announced for sites identified by Gencos, the official maintained.
The sources said, Prime Minister would be suggested to allow the ministry to invite pre-qualified IPPs to quote discounts on the benchmark tariff in sealed envelope and lowest levelised tariff be accepted.
According to the official, it was proposed that all the three 450 MW combined cycle plants be installed through private sector IPPs besides continuation of ongoing programme of Gencos and KESC for generation expansion.
PPIB has made some preliminary due diligence with the existing IPPs and the response of existing IPPs was very encouraging as many of them were ready to expand their capacities, adding that the existing IPPs were in a better position to offer real discount because they possesses not only the expertise and knowledge of IPP-business but they have competitive edge owing to availability of infrastructure, the official continued.
The ministry has proposed different set of tariffs for the existing and new IPPs, saying, the rational behind the plan was that existing IPPs possessed some infrastructure, which would help them in reducing costs of expansion in their system. On the other hand, new IPPs would have to start from scratch and may require some higher tariff compared to existing projects.
Nevertheless, capacity expansion of existing IPPs as well as the new IPPs would be processed under the provisions of Power Policy 2002 with some minor deviations.
The official said, the ministry had also proposed 25 cents per unit tariff based on energy sold during the first 10 years of the project operations as provided in Power Policy 1994 for projects commissioning before summer of 2007.
The meeting, sources said, was expected to agree with a proposal, according to which it was suggested that a tariff committee comprising members from the Ministries of Water and Power, Finance, NTDC, Nepra and PPIB should be constituted to resolve tariff issues.
An official of the Prime Minister Secretariat told this scribe that Prime Minister would preside over another meeting regarding restructuring of National Electric Power Regulatory Authority (Nepra).
The Ministry of Water and Power has already proposed that an appellate body should be formed to review the Nepra's disputed tariff determination, besides appointment of professional members and allowing Wapda to adjust its tariff quarterly in accordance with automatic fuel adjustment formula.
The Nepra, however, was of the view that such proposals were not acceptable to it. The World Bank was also supporting the ministry's viewpoint.
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