ISLAMABAD: The Petroleum Division has finalised a proposal to conduct efficiency audit of 218 co-generation units which have submitted undertakings before June 30, 2022, to be implemented after the approval of Cabinet Committee on Energy (CCoE) and Federal Cabinet, official sources told Business Recorder.
Sharing the details, sources said, CCOE on June 04, 2020 while considering a summary on policy guidelines for energy efficiency audit for Captive Power Plants’ (CPPs) approved the following: (i) minimum efficiency benchmarks may be set for captive power units whether in single cycle or combined cycle using natural gas as a primary fuel including 45 percent minimum net efficiency for units up to 50MW and 50 percent minimum net efficiency for units above 50MW; (ii) captive units, whether in simple cycle or combined cycle, where steam is also used in the process of industrial undertaking, may have a minimum net combined electrical and thermal efficiency of 60 percent; and (iii) captive power units not meeting approved criteria will be given 90 days to modernize/upgrade their units and in case of failure to comply, the gas tariff for such units will be revised to that of the notified RLNG tariff.
Pursuant to decision of the CCoE, NEECA served notices to the captive power units of its intent to conduct efficiency audit but instead of voluntarily offering themselves for the audit the units preferred to seek stay orders from the respective High Courts restraining NEECA to proceed further.
As per the latest information available, 541 units (284 on SSGCL & 293 on SNGPL) declared themselves to be co-generation units, however only 481 units submitted affidavits to NEECA; and 432 units (360 on SSGCL & 72 on SNGPL) have sought stay orders on one pretext or another.
Cabinet Committee on Energy in its subsequent decision on January 21, 2021 while considering another summary approved those captive power units of both non-export and export industry having sufficient electricity loads to be discontinued gas/RLNG supply with effect from February 01, 2021 and March 15, 2021 respectively. Only exception would be for the units which did not have electricity connection until December 1, 2021 and the cogeneration units which were to undergo energy efficiency audit of NEECA within three months of their declaration by February 01, 2021.
NEECA initiated hiring of the validation firms for energy assessment of cogeneration captive power units and accordingly Request for Proposal (RFP) was issued on April 23, 2021. After due diligence, three firms were found responsive, however, NEECA could not award contract to them considering the PPRA Rules 2004 and the estimated cost of carrying out the audit of 481 units was Rs 632.37 million. Consequently, NEECA through Power Division submitted a summary to the CCoE seeking approval of the following proposals: (i) NEECA may be advised to shortlist and pre-qualify validating firms for conducting validation of the declaration of self-declared cogeneration units; (ii) ToRs for the said validation exercise would be as already decided; (iii) short-listing /pre-qualification will only be on technical basis and no financial analysis will be done; and (iv) all self-declared co-generation units would be required to get validation certificate from one of the pre-qualified firms at their own cost, within a time frame assigned by Petroleum Division. CCoE in its meeting held on October 08, 2021 did not approve the proposals and advised Petroleum Division to hold consultative session on the issue and submit proposal for price review of the gas supplied to CPPs.
In pursuance of CCoE’s advice Petroleum Division submitted a tariff revision summary to Federal Cabinet which was approved on November 09, 2021 wherein it was decided to charge $9/mmbtu to captive power units of export industry for the period November 15, 2021 to March 31, 2022. However, many units assailed the decision of Federal Cabinet in respective High Court(s) and obtained stay orders.
Since the stay orders were against the charging of tariff, therefore, SNGPL disconnected gas/RLNG supply to units in Punjab and Khyber Pakhtunkhwa from November 15, 2021 which was subsequently restored on December 29, 2021 subject to provision/furnishing of an undertaking by each captive unit. Out of 311 units on SNGPL, 218 units provided undertakings agreeing to get energy efficiency audits conducted before June 30, 2022.
Foregoing in view, Petroleum Division submitted the following proposals for consideration: (i) NEECA may be authorised to proceed with energy efficiency audit of captive power units claiming to be cogeneration units after pre-qualifying the firms on technical grounds; (ii) captive power units claiming to be co-generation units would be required to get validation certificate from one of the NEECA pre-qualified firm(s) at their own cost; and (iii) energy efficiency audit may be initiated no later than March 31, 2022 for all the captive power units of export industry to be completed by June 30, 2022.
Copyright Business Recorder, 2022