PEPCO sources claim: With little rehabilitation, GENCOs are capable of providing energy

The public sector plants of Generation Companies (GENCOs), presently put on standby, are capable of providing energy according to the system's demand with very little investment on their rehabilitation, said reliable sources from Pakistan Electric Power Company (PEPCO).

According to them, all the GENCOs have the infrastructure and trained manpower in place to operate the plants. Rather, they have pointed out that ironically most of the manpower employed by the Independent Power Producers (IPPs) has been trained on the WAPDA power plants.

It may be noted that a recent reported submitted to the government has noted that 16 plants of IPPs had invested a combined capital of Rs51.80bn under the 1994 Power Policy and have so far earned more than Rs415bn in profit while taking out dividends in excess of Rs310bn. Most of the IPPs had an investment payback period of two to four years, profits generated were as high as 18.26 times the investment and dividends are taken out as high as 22 times the investment. Six companies earned an average annual return on equity (ROE) between 60-79pc and four companies earned ROE of around 40pc.

PEPCO sources said the GENCOs can meet the country's power requirement in peak summer after the addition of Neelum Jhelum Hydro Power and the extension of the Tarbela dam. Similarly, they have stressed on shifting the coal power plants to THAR coal with revised Internal Rate of Returns (IRRs) in accordance with the per tariff approved by National Electric Power Regulatory Authority (NEPRA). They said the Guddu plant is operational despite being a GENCO, which means it is in the merit order.

They said the national crime of giving priority to IPPs in the name of efficiency was committed by the Musharraf government in collaboration with the Oil Marketing Companies (OMCs) when gas quotas from all national power plants were diverted to IPPs and even installation of captive powers in the textile sector were encouraged. They said the village gasification in south Punjab and Sindh was expanded at that time and most of GPPs had become idle.

They said the IPPs are a burden on national exchequer and are draining dollars without generating a single unit of power in the name of capacity payment and IRR.

When pointed out that merit order set for the power plants, sources said the order of preference for a unit to be operational is still discretion of National Power Construction Corporation (NPCC). They said the IPPs installed in the recent past are more efficient than those installed in the past. The same is true for the RLNG plants; they said and added that an out of box solution with drastic changes in the power generation paradigm, and in the interest of GENCO power plants in Guddu, Jamshoro, and Muzaffargarh, is required to save our national assets.

According to reliable PEPCO sources, a paper for the enhancement of public sector generation to 10,000 megawatts was prepared back in 2009, but the Ministry of Water and Power had turned it down.

Most of the GENCOs were originally furnace oil-based but they were converted on gas by the government. Therefore, all these power plants can run on gas, furnace as well as on the dual fuel. Re-powering of these plants is costlier due to unwanted delays in timely BMR.