ISLAMABAD: Senate Standing Committee on Power has asked National Electric Power Regulatory Authority (Nepra) to put capacity payment of Independent Power Producers (IPPs) on ice as Rs 1.2 trillion were paid as capacity payment during 2023.
Official documents available with Business Recorder reveal that the committee, in its previous meeting, also took serious notice of recent increase in electricity tariff and asked Power Division to give an update on it. Naveed Qaiser, Manager, CPPA-G briefed the Committee in detail about category-wise electricity rates with Quarterly Adjustments (QTAs), Fuel Charges Adjustments (FCA) and Debt Servicing Surcharge (DSS).
He informed the Committee that national average of Jan 2022 was Rs. 21.55 which increased to Rs 30.55 per unit in March 2023. The major component in base rate is the generation cost which includes 50% capacity charges paid to different IPPs.
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The Chairman Committee enquired whether government has any plan to stop the capacity charges to be paid to IPPs as it is the main reason for the increase in per unit cost.
The Committee was informed that Nepra determines the capacity charges to be paid to IPPs. The Chairman Committee stated that as per briefing of CPPA-G, the generation cost includes 50% of the capacity charges paid to IPPs, adding that the IPPs need to be bound to the fact that fuel is not available in abundance in this country and they may not receive the capacity payment during energy crisis keeping in view the current inflation in the country, as well.
The Manager CPPA-G informed the Committee that capacity payment of few IPPs was frozen after negotiations with them.
The Chairman Committee suggested that capacity payment of IPPs may be put on freeze. The county is in an energy crisis and IPPs may not take these payments. He asked about the break-up of electricity rates from Jan, 2022 till March 2023.
The Committee recommended CPPA-G to provide the break-up sheet of electricity rates in Jan 22 till March 23.
The Manager CPPA-G further briefed the Committee in detail about rebasing of electricity rates by Nepra. In FY 23 (rebase), the units received were 128 billion whereas 113 billion units were sold. The allowed T&D loss is 11.70 per cent. The representative of Nepra also briefed the Committee that Discos’ losses range from 8 per cent to 32 per cent.
Chairman Committee enquired whether theft of electricity is also included in losses. The Committee was informed that losses over and above Nepra’s target also include theft. Chairman Committee recommended Power Division to sit with all Discos and make a plan to curb theft of electricity and Kunda (hooks) connections.
The Chairman Committee sought details of total invoices sent by CPPA-G during the last three years to Nepra and the amount deducted on the basis of those invoices. The representative of Nepra informed the Committee that Nepra has deducted Rs 1.2 billion of invoices sent by CPPA-G in last three years and capacity payment paid to IPPs is Rs 1.2 trillion in 2023. The Chairman Committee suggested Nepra not to pass on those losses to consumers for which Discos’ officials are responsible.
The Standing Committee argued that Power Division and Nepra should reduce losses, recommending Power Division to take action against those Discos and officials who are involved in theft of electricity in their areas.
After detailed deliberations, the Committee unanimously decided and recommended CPPA-G to provide month-wise details of IPPs established in Pakistan so far along with capacity payment paid to them in tabulated form.
The Committee also recommended Nepra to stop paying capacity payment to IPPs. It recommended Power Division to provide the details related to provision of free electricity units to all employees of Discos, GENCOs, NTDC and other departments related to energy sector and their utilization.
Copyright Business Recorder, 2023