ISLAMABAD: The Federal Cabinet has approved restructuring of National Transmission and Despatch Company (NTDC) envisaging dividing it into two entities - National Grid Company Projects (Projects) and National Grid Company Assets (NGC Assets), well informed sources told Business Recorder.
The Cabinet accorded the approval of Power Division’s summary on November 6, 2024 through circulation.
The NTDC was created as a result of unbundling of Wapda in 1998 and was incorporated as a public limited company on November 6, 1998 under the Companies Ordinance 1984 (now Companies Act 2017). The Nepra granted NTDC transmission licence in 2002 for a term of 30 years in terms of Section 16 of the Nepra Act 1997 as amended from time to time.
Govt decides to divide NTDC into two entities
The NTDC is National Grid Company in terms of Section 17 of the Act and responsible for construction and maintenance of transmission lines and 220KV/ 500KV grid stations across the country. Over the years not only the conventional infrastructure of the company has expanded considerably but the company has also ventured into latest higher voltage technologies like 765 kV and ± 600 KV HVDC.
According to Power Division, currently NTDC is facing serious challenges, inter-alia, lack of vision and strategic planning, tedious and outdated business processes, unresponsive management structure and above all inefficient project management framework.
Resultantly, not only the whole transmission system is fraught with instability and unreliability, but the execution of projects is also often delayed, incurring huge financial losses to the national exchequer.
On average, projects of transmission lines that are planned to be implemented in 2 to 3 years are delayed beyond 7 to 8 years.
The top brass of NTDC has been grilled by the Senate Standing Committee on Power several times for alleged corruption in projects and extending favours to blue-eyed companies. And several senior officials have established their own companies under fake names to get sub-contracts from the main companies against the favours given to them, said one of the officials in Power Ministry on condition of anonymity.
Another aspect is that since provinces have and are establishing their transmission companies, the monopoly of the NTDC is over which implies its income will be also shrink.
The sources said that for enhancement of functional efficiencies, NTDC was divested from its market operator function and Central Power Purchasing Company-Guarantee (CPPA-G) was created in 2015. Likewise, a proposal for establishing Independent System and Market Operator (ISMO) by merging the system operator function of NTDC and market operator function at the Central Power Purchase Authority (CPPA) was approved by the Cabinet a few days ago.
During a sectoral briefing in April, 2024, Prime Minister Shehbaz Sharif expressed concern at the sub-optimal performance of NTDC, and tasked a committee comprising Minister for Economic Affairs, Minister for Power, Secretary Power Division and Dr Fiaz Ahmad Chaudhry, a power sector expert, to propose restructuring plan of NTDC after conducting thorough insights into its institutional and structural aspects, responsible for its functional inefficiencies.
The committee held deliberations in subsequent months and prepared a plan for institutional and implementation framework that was presented to the Prime Minister during a meeting held on September 13, 2024. The plan contained the following proposals:(i) a new project development company called National Grid Company (Projects) may be created by extricating the functions of project preparation and implementation (both new and maintenance related) along with procurements, supply chain and revenue centres from the current NTDC. Services rendered by the new company will account for over 80% of NTDC’s budget; and
(ii) the role of existing NTDC may be limited to transmission service provision and assets management by renaming it as National Grid Company (Assets).
The Prime Minister approved recommendations/ proposals of the committee with regard to the restructuring of NTDC.
Power Division placed recommendations before the Federal Cabinet for approval so that the new State Owned Enterprises (SOE) namely National Grid Company Projects (Projects) is incorporated with the Security Exchange Commission of Pakistan (SECP) and NTDC is renamed as National Grid Company Assets (NGC Assets) by completing the requisite codal formalities/ documents.
According to IMF Staff Report released on October 11, 2024, Pakistani authorities noted that they are also finalising the restructuring of the NTDC into three entities, the Independent System Operator and Market Operator (ISMO), which will assume the NTDC’s system operator function - the Power Transmission Infrastructure Development Company (PTIDC) and the National Transmission Maintenance Company (NTMC). This restructuring will increase independence and oversight of both transmission and market operations.
The new entities will be operational and full restructuring will be completed by end-December 2024 meant to establish an Independent System and Market Operator (ISMO) by merging the Central Power Purchasing Agency - Guaranteed (CPPA-G) and the National Power Control Center (NPCC).
However, the new entity, which is supposed to be instrumental in streamlining electricity market will come into existence after receiving formal approval from the Federal Cabinet and resolving some issues identified by the National Electric Power Regulatory Authority (Nepra).
Copyright Business Recorder, 2024