State of Industry Report 2022: Most KE plants are obsolete and should be replaced: Nepra

KARACHI: The National Electric Power Regulatory Authority (Nepra) has said that most of the generation plants of the K-Electric have completed their life, and are required to be replaced with efficient and least cost new capacity.

Also, Nepra observed that the KE has been unable to implement the SOPs regarding safety measures due to which some 33 fatal incidents have been occurred in its service territory in fiscal year 2022.

In its State of Industry Report 2022, the power regulator has mentioned that the Supreme Court of Pakistan, in 2020 SCMR 1,488 titled ‘Naimatullah Khan Advocate and others vs Federation of Pakistan and others has, inter alia, directed that the KE shall ensure and take all steps and measures that in future no electrocution at all takes place to the residents of Karachi and in case any such incident occurs, the CEO and other officers of the KE shall be taken to task and the exceptional amount of damages shall be recovered from them.

Further, criminal cases shall also be registered against the CEO and other officers of the KE.

Nepra said that delay in commissioning of Bin-Qasim Power Station-III (BQPS-III) is resulting into billions of rupee financial loss to the country.

KE was allowed to construct 900 MW RLNG based power plant BQPS-III at efficiency of 59.23% with the following timelines for commissioning of the Project:

Simple Cycle Unit-I July, 2018 and Combined Cycle, July 2019, whereas the commissioning of the Unit-2 simple cycle April, 2019, and combines cycle December, 2019.

Accordingly, investment was allowed to KE through its tariff determination.

Unfortunately, this plant has not yet achieved COD. Had this plant achieved the COD, it would have replaced the generation from costliest RFO based BQPS-I, Tapal Energy, Gul Ahmed and other costlier power plants in the KE system.

Due to delay in COD of BQPS-III, the power sector of Pakistan and electric consumers are suffering badly. The estimated financial loss due to delayed commissioning is estimated in billions of rupees.

Although the observation in the referred case relates to KE however, the fundamental principles/standards may equally be applicable in cases of the DISCOs. Therefore, DISCOs need to be more careful and shall ensure all necessary steps to avoid fatal accidents in their respective areas.

The report said some 196 fatal accidents occurred across 11 DISCOs including KE during FY 2021-22 against 189 fatal accidents recorded during FY 2020-21.

Rupees 483.5 million fine has been imposed upon the DISCOs due to the fatal accidents and these have been directed to compensate the families (approx. 76) of the deceased on account of fatal accidents that occurred due to their negligence and non-compliance to the relevant standards, which was required to be adopted by the DISCOs.

The State of Industry Report further said that generation fleet of K-Electric (self-owned, IPPs and CPPs) comprise of costlier thermal power generation plants.

As like 900 MW BQPS-III power plant was supposed to commission during FY 2018-19, and was likely to replace the BQPS-I, which still could not achieve commercial operations till FY 2021-22.

The KE, instead of operating its expensive plants, could have procured electricity from the underutilized power plants of the CPPA-G system, which would have improved their utilization, but, this could not be ensured due to various reasons most important of which was that both CPPA-G and the KE could not agree and finalize the agreement to this effect.

This issue due to which all stakeholders are suffering, require urgent decisions and quick actions to utilize available resources efficiently

For the last many years, the relatively efficient power plants of KE at Korangi and SITE are being operated at a lesser capacity, reportedly due to either non-availability of gas or the low pressure of gas supplied by Sui Southern Gas Company Limited.

On occasions, due to low pressure, the available gas is burnt in the boiler which is nothing but burning of precious gas to its much lower value.

This not only results in loss of generation from relatively efficient power plants but also causes loss due to inappropriate burning of precious primary energy sources.

Presently, the KE is purchasing electricity from CPPA-G system to the tune of 1,100 MW. It is observed that the payment against purchase of electricity by the KE from CPPA-G system is adjusted against the tariff differential subsidy owed by the Federal Government to KE due to policy of maintaining uniform tariff across the country. Indirect payment to CPPA-G, against sold electricity to KE, generally causes delay in payment of due amount and thus impacts CPPA-G to meet its payment obligations.

It is, therefore, advisable that the payments against all transactions between KE and CPPA-G and/or any other entity shall be made by KE under a commercial contract instead of linking with the payments of subsidies by the federal government.

The report said that as on 30th June 2022, total receivables of KE stood at Rs. 195 billion whereas, the receivables were Rs. 198 billion as on 30-06-2021 showing a decrease of Rs. 3 billion during the reporting year FY 2021-22.

Copyright Business Recorder, 2022