KARACHI: The K-Electric paid Rs 160 million out of a total of Rs 200 million as penalty imposed by the National Electric Power Regulatory Authority (Nepra) on account of delay in commissioning of its flagship RFO-based Bin Qasim Power Station-III (BOPS-III), increased load shedding, violations of license etc in 2020.
According to a judgment of Nepra’s Appellate Tribunal in an appeal No-11/NT/2022 titled K-Electric v/s Nepra on October, 5 2022, a copy of which available with Business Recorder: “It was brought before this Tribunal that on account of increased load shedding, noncompliance/violations stipulated in the licence of KEL, including delay in Commissioning of BQPS-IIl under Section 27B & 28 of Power Act, Nepra issued show cause notice to KEL on July 23, 22020.
Subsequent to hearing of the show cause, Nepra through its order dated August 27, 2020, imposed a fine of Rs 200,000,000 (Counsel for Appellant informed that Rs 160 million already paid by KEL).”
Chairman Nepra Tauseef H Farooqi also confirmed on January 25, that KE paid Nepra Rs 160 million as penalty. He was presiding over a public hearing in the matter of re-consideration of the Licensee Proposed Modification (LPM) in the generation licence of K-Electric Limited (KEL) held at the Nepra Headquarters, Islamabad and attended by stakeholders from Karachi via Zoom.
Interestingly, the remaining Rs 40 million out of a total Rs 200 million penalty imposed by the authority on KE neither came under discussion in the Nepra hearing, nor mentioned in the said Appellant Tribunal’s judgment.
The KE had initially committed to bring online BQPS-III project by July 2018. But the power company has not been able to even bring online the BQPS-III unit-1.
The plant is still in commissioning phase. It has been offline since August 1, 2022 following what KE said a fault identified during a test being conducted as part of the plant’s commissioning. The development arose during testing being performed by Siemens AG as part of the final stages of commissioning.
Nepra Hearing
Sharing the background of the matter, a Nepra representative said the Authority approved the LPM of KEL through its determination dated September 15,2021 inter alia, allowing operation of Unit-3 of BQPs-1 during May 01 to August 15, 2021.
However, the Authority restricted the cost of operation of the said unit to the extent of Fuel Cost Component of BQPS-III. In this regard, KEL filed a review petition for allowing full cost of the interim operation of Unit-3 of BQPS-1, however, the Authority through its determination upheld its earlier decision in the matter rejecting the review petition.
In consideration of the above, KEL filed an appeal in the Nepra Appellate Tribunal against the determination of the Authority regarding rejection of its review petition.
The Appellate Tribunal in its judgment dated October 05, 2022 inter alia, decided to allow the appeal of KEL, setting aside the determination of the Authority dated September 15, 2021 and sent the matter back to the Authority for a fresh decision, after giving chance of audience to all stakeholders in accordance with law, rules. Accordingly, the Authority has decided to hold a public hearing on Thursday.
Ayaz Jafer, Director Finance KE said the company requested for the utilisation of BQPS-I unit 3 on interim basis to avoid additional load management in accordance with EMO and after evaluating available options including rental power.
The KE has already incurred additional expenses of Rs 350 million to initiate and run operation from BQPS-I unit 3 (this cost was not allowed to the KE under MYT). Accordingly, the KE requests Nepra to not further penalise KE by disallowing the prudent fuel cost which has been incurred in the best interest of consumers.
On this chairman Nepra said for other IPPs, if they fail to achieve commercial operation date (COD), we have a mechanism of liquidity damages. But, the KE itself is producer, off taker, system, and market operator and completes its projects without giving dateline. What recourse available with us to ensure that the consumers of Karachi should not be unduly penalised due to delays on the part of KE as they are compelled to buy expensive electricity from your costly old power plants?
CFO KE Muhammad Aamir Ghaziani responded: “Yes, the mechanism is available in our case. We have LD mechanism on BQPS-III, as this project is yet to be commissioned and handed over to the KE. LD will be adjusted by the cost of project.”
Industrialist Arif Bilwani posed a question as to why KE utilised BQPS-1 unit 3 without approval from Nepra. On this, a Nepra official said KE had filed a request in April for the interim operation of the unit, but the authority did not allow it. It was no more in KE’s generation license fleet, he said.
“The KE is an example of monopoly, and oligopoly in Karachi and the consumer interest should come first, than KE’s,” he said.
He said why didn’t KE use the cheapest PLL gas at BQPS-1 unit 3 despite it had provision for the gas utilization a three plants, simultaneously, as mentioned by the power company in its application (under discussion).
On this, KE official said BQPS-III was expected to be commissioned in May, but it was not commissioned. Meanwhile, Nepra chairman asked KE to submit reply in writing, with the authority.
Imran Shahid from Jamaat-e-Islami (JI) urged Nepra to uphold its previous decision and do not pass on the burden of KE’s “incompetence” to consumers. Even in this harsh weather, he said that Karachi is subjected to hours-long load shedding.
Imran said KE conduct load shed at various city areas through PMTs shut downs under the guise of line losses.
On this Tauseef H Farooqi said that Nepra is totally against the load shedding based on Aggregate Technical and Commercial Losses (ATCLs). He said if there are 5,000 consumers connected with a PMT, of them 2,000 pay power bills regularly, while 3000 don’t. In such case, no power utility is allowed to disconnect electricity of the remaining 3,000 loyal consumers on the basis of ATCLs. “We consider it as a collective punishment’ and we have taken up the matter with the relevant ministry.
Nepra official IrfanShaikh said legal action has been initiated against [Discos] for carrying out load shed based on ATCLs.
Chairman Nepra said KE’s generation is neither adequate nor cost efficient and asked KE to come up with a comprehensive Renewable Energy Plan (REP) to ensure relief to its consumers.
Engineer AneelMumtaz on this occasion said that two issues were framed in the tribunal case i.e whether the appellant was entitled for FCC of RFO use in operation of Unit 3 of BQPS-I, or the authority was justified to grant FCC of committed upcoming Power plant of RFO-based BQPS-III.
However, these issues are not being discussed here.
A penalty which has no relevance to be discussed in this hearing is being more focused. He asked a couple of questions if KE challenged that penalty imposed by Nepra in any forum. Was the tribunal technically sound in transmission distribution and generation field?
He said the Tribunal is bound to decide cases falling within their jurisdictions in accordance with law. But the tribunal has taken help from references outside field which are not related to electrical cases.
Copyright Business Recorder, 2023