ISLAMABAD: K-Electric (KE) is likely to purchase 82.25-MW hydel electricity from Turtonas-Uzghor hydropower projects located on river Golen Gol in Chitral, Khyber Pakhtunkhwa (KP) under Competitive Trading Bilateral Contract Market (CTBCM) regime, well informed sources in PPIB told Business Recorder.
The project joins with Mastuj River about 22-km north-east of Chitral. The proposed powerhouse of the project is located on right bank of Golan Gol River near Uzghor Village.
Sharing the details, the sources said, PPIB, in March 2017 issued Letter of Intent (LoI) to a joint venture of M/s Sinohydro Corporation Limited of China, and Sachal Engineering Works (Pvt.) Limited of Pakistan.
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The sponsors successfully carried out the feasibility study under the terms of LoI which was approved by PPIB’s Panel of Experts (PoEs) in June 2019. The project was envisaged to be connected to the National Grid and CPPA-G to be the power purchaser.
The project sponsors incorporated a Special Purpose Vehicle (SPV) for the project with the name M/s Uzghor Hydro Power Company Pvt. Limited, in January 2020.
National Electric Power Regulatory Authority (Nepra) issued generation licence to the Company and tariff determination on April 19, 2021.
The Company maintained that in the tariff there were certain provisions against the policy like hydrological risk borne by the Company instead of Power Purchaser and single-part tariff instead of two-part tariff etc. and filed a motion for leave for review (Review Motion) before Nepra.
During the hearing of Review Motion on July 29 2021, Nepra withdrew the already determined tariff and reasoned that CPPA-G would not be able to procure the power from the project as there was no plan for power procurement from the project under the IGCEP 2021-30 approved by the Nepra.
Further, it was suggested by the Nepra that as the project was not optimized in the then lGCEP 2021-30 iteration, the sponsors may consider setting up a power plant to sell electricity either under a bilateral contract or through a merchant plant under Competitive Trading Bilateral Contract Market (CTBCM) regime. However, the Company against the decision of Nepra filed an appeal before Appellate Tribunal (Nepra).
Meanwhile, the sponsors initiated negotiations with K-Electric (KE) regarding procurement of the power and both parties, i.e., the Company and KE singed a LoI on September 23, 2022 to develop the project on an exclusive basis for the power off-take by KE by wheeling arrangement through NTDC network, subject to approval from Nepra and NOCs from concerned regulatory agencies, departments or bodies.
The IGCEP 2022-2031 was approved by the Nepra on February 1, 2023 wherein the project has been optimized for KE procurement upon the decision of Appellate Tribunal (Nepra); the Nepra while considering the fresh tariff petition filed by the Company directed the Company to submit application before the Nepra for change of power purchaser from CPPA-G to KE in its earlier issued generation licence.
Accordingly, the Company has submitted application for modification in its generation licence. On the application of the Company, Nepra has sought comments from the stakeholders including PPIB which will submit response to Nepra soon after decision of the Board on this matter is notified.
The Project Company, in its letter of February 24, 2023 addressed to PPIB, has suggested the way forward for implementation of the project with KE as power purchaser and submitted a proposal to PPIB requesting support/ assistance from PPIB interalia in following areas:(i) consider supporting the Project Company to change the project power purchaser to K-Electric; (ii) support from PPIB in the development/ implementation of wheeling mechanism for power off-take and assistance in intercommunion through NTDC, as well as, for signing connection agreement with NTDC; (iii) support of PPIB in the provision of bankable security package for the off-take of hydro by SOLR/ KE under CTBCM framework and;(iv) support of PPIB in safeguarding the provincial rights including project transfer rights to Khyber Pakhtunkhwa (KP) province after the completion of Nepra approved concession period and execution of WUA.
The project company also urged/ insisted in its proposal for Tri-Partite arrangement of facilitation/ development between PPIB, KE and the project company in which the right and responsibilities of all parties could be finalized and the facilitation arrangement could be utilized as a template for future cooperation between PPIB and KE for power procurement.
PPIB sought comments from the CPPA-G and NTDC on the Company’s proposal.
In response, CPPA-G, in its letter of May 17, 2023 communicated that CPPA-G has no objection if both parties, i.e., the Company and KE enter into mutual agreement for sale of power, whereas, NTDC, in its letter May 10, 2023 informed interalia; (i) the interconnection of the project is only possible through upgradation of existing 132 kVA transmission system (owned by WAPDA) to 220 kVA arrangements and under Nepra Open Access (interconnection and wheeling of electric power) Regulation 2022.
However, its feasibility relies on factors such as the timelines of other hydropower projects, Transmission System Expansion Plan (TSEP), and the financial capabilities of the National Grid company; (ii) before the upgradation, the assets would need to be transferred to a Transmission Licencee like the National Grid Company (NGC) or the Provincial Grid Company (PGC) in order to reinforce the lines up to 220 kV;(iii) any wheeling from Turtonas-Uzghor would include use of system charges and transmission losses for WAPDA,/PESCO (as existing transmission line is owned by WADPA) up to Chakdara 220-kV and for NTDC from Chakdara 220-kV till the designated KE interconnection; (iv) once the interconnection transmission line is upgraded to 220-kV, the existing 132kV grid stations operated by PESCO become redundant which need to be discussed with PESCO; (v) Open Access Regulations allows the generation company to arrange financing for interconnection facilities, but it doesn’t address financing for the reinforcement of shared assets.
To clarify whether the generation company can secure financing for the reinforcement of existing transmission infrastructure, which is a shared asset between PESCO and WAPDA, PPIB has suggested sponsor companies to seek clarification from NEPRA and; (vi) further clarification is required to determine whether a portion of the financing can be allocated to other hydropower projects that have obtained a Letter of Support (LoS) prior to their financial close but have a commercial operations date after Turtonas-Uzghor. Besides, a suitable mechanism needs to be developed for reimbursing the financing of these other project developers.
The sources said the PPIB management maintains that the Board may, in principle approve the request of the Company to sell electricity to KE instead of CPPA-G. Further, PPIB in consultation with the stakeholders will prepare a framework/ structure regarding the said change of the power purchaser and present it in the next meeting of the PPIB Board as Projects’ Committee of PPIB has already cleared the proposal.
Copyright Business Recorder, 2023