ISLAMABAD: M/s Nishat Group has asked National Transmission and Despatch Company (NTDC) to include its two power plants in its Integrated Generation Capacity Expansion Plan (IGCEP) on supposition of their conversion on Thar coal as K-Electric (KE) has also shown interest to buy electricity from both plants.
Ghazanfar Hussain Mirza of Nishat Group, in a letter to Managing Director NTDC Rana Abdul Jabbar conveyed that the company intends to convert its Lalpir and Pakgen complex from imported RFO to local Thar coal.
Both projects submitted a concept paper to PPIB on October 12 2023 which highlighted key features of the conversion project, its tentative tariff and its benefits on national level. It was presented to SIFC in a meeting on December 20, 2023 in presence of all stakeholders including NTDC.
The meeting decided that PPIB will forward relevant details of the project to NTDC so that it could be included in the subject IGCEP that is currently under preparation.
Nishat Group in its letter to NTDC as sponsors of the project, requested to include them in IGCEP, either under a separate scenario (if not selected under base case scenario) or as a candidate project for KE.
According to Nishat, the Group has submitted the following in support of its request: Lalpir and Pakgen were established under 1994 Private Power Policy on BOO basis.
Their PPAS expire in October 2028 (Pakgen) and November 2028 (Lalpir). The conversion project is estimated to take approximately 4 years to achieve financial close and complete EPC.
The time for approvals, consents and tariff is in addition. Therefore, project be initiated immediately to achieve a short time switchover. Selection in current IGCEP iteration is crucial for the converted project to achieve COD right after the expiry of old PPAs.
The Group further stated that the existing complex will be available for despatch for most of the project schedule. It would be partially demolished at the last stage. The exact time required for early suspension of facility will be established on completion of project design.
As per current NEPRA (Electric Power Procurement) Regulations, 2022, a project needs to be part of IGCEP in order to receive any tariff, licence, consent of approval.
Moreover, as per clause 3(2)(e) of these regulations, “any plants whose power purchase agreements are expiring during the planning horizon, may be considered for providing electric power to suppliers of last resort subject to fulfilment of least cost criteria and optimization.”
The Group claims that the project is offering least cost tariff with utilisation of indigenous fuel, hence fulfilling the pre-requisites of IGCEP.
The Group, in its letter, further stated that it is open to get into new agreement with Discos or K-Electric, as per the country’s requirement.
The project will offer least cost tariff on indigenous fuel and is fulfilling the criteria laid down under Regulations. Hence this project should be included in current IGCEP iteration, so that it can be completed on time to provide cheapest reliable electricity by utilizing indigenous fuel.
Nishat Group maintains that its project data will be scrutinized in light of applicable guidelines and its potential savings, while compiling current IGCEP scenarios adding it would be formally informed of reasons in case NTDC does not agree with our request.
The Group again highlighted the following key benefits the project will offer: (i) estimated EPP is 2.8 cents/kWh. At this EPP, it will be within 5 to 8 position on economic merit order; (ii) with local fuel and a high merit order, the project can easily displace expensive RLNG in the region throughout the year; (iii) the project will cause no extra capital expenditure on NTDC as the complex is already connected to 220kV Muzaffargarh Grid Station; (iv) the project is located mid-country and will continue to provide grid stability, much needed by NTDC; (v) being a conversion project, the cost is estimated at $230 million compared to $500 million for a green-field project. This cost includes rehabilitation of steam turbine, alternator and DCS. Thus, the total cost of energy will be lower than a green-field project on Thar coal even if located near the mines; and (vi) K-Electric has shown keen interest to buy electricity from Lalpir and Pakgen, post conversion, to replace purchase from national grid.
This has made the project viable even if Discos don’t have the appetite during current IGCEP iteration.
Copyright Business Recorder, 2024
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