National Electric Power Regulatory Authority (Nepra) has come down heavily on Karachi Electric Supply Company (KESC) and Sui Southern Gas Company (SSGC) for their alleged irrational facilitations to the DHA Cogen Ltd (DCL) which eyes revival of the dysfunctional 94MW power plant.
As KESC and SSGC are said to have struck a deal with the DCL without 'justification', Nepra officials raised various questions over the issue during a public hearing organised by the authority here on Wednesday at National Institute of Management (NIM) against the petition filed by DHA Cogen for fresh 'Determination of Generation Tariff.
"How KESC is going to purchase electricity from DCL despite its tall claims of having much efficient plants lying idle for want of gas. It should rather demand that the gas being allocated to DCL should be shifted to its plants, comparatively efficient," said Khwaja Muhammad Naeem, one of the three members of Nepra. "It does not make sense that the power company is going to buy electricity while leaving its own plants idle," he said, adding that the company has been demanding more gas from SSGC.
To a question whether KESC has entered into a deal with DCL, as stated in the petition, KESC's representative said that the company was still in process of signing any agreement with the DHA Cogen for the purchase of electricity. He also criticised SSGC, saying that the organisation, which was already facing shortage of gas, could supply gas to DCL plant.
Through a letter of comfort issued to Petr J Dailey, Chief Executive Officer of International Electric Power which is going to have majority share of DCL, SSGC on September 11, 2012, said, "We are pleased to confirm that SSGC's Board has approved the continuation of gas supply to DCL until 2030." The letter, a copy of which is available with Business Recorder, further said that SSGC Board has accordingly directed certain amendments in the GSA which will be shortly shared with DCL".
Petr, who argued in support of the petition filed at Nepra, also faced various questions such as why an idle plant should be revived when there are already efficient plants in the country due to only lack of gas. A representative of previous management of the DCL plant said that they have only two options: revive power units or sale them in scrap.
Earlier, Shoukat Ali Kundi, another member of Nepra, said the petition was not maintainable as the authority had already determined tariff for DCL in 2005. The plant was rendered dysfunctional without informing the authority. Under generation rules 141-C, 2002 of the authority, a fresh demand by the new management of DCL was a violation of rules.
However, Habibullah Khilji, Chairman Nepra decided to take petition as a case in the authority. He also inquired from the petitioner whether an environmental study and other formalities related to the plant's revival were made prior to going for tariff determination. Nepra officials later asked DCL management to give its reply in writing to all questions, the authority would be sending to it soon, within 10 days of receipt of the questionnaire.
Some of the concerned citizens/participants of the hearing including Choadary Mazhar and Hamid Maker also raised questions over the viability and new tariff of the plant. Another participant suggested to Nepra to encourage foreign investment. According to the petition, International Electric Power LLC (IEP), a US-based Independent Power Producer, has reached an agreement with AEI Asia LTD, for the acquisition of Sacoden Investment PTE LTD, a Singapore-based entity, which owns 60.22 percent of the shareholding of DCL.
The remaining shares of DCL are held by DHA, Faisal Bank Limited, and several other smaller investors. IEP has claimed to have developed a comprehensive rehabilitation plan along with details of the technical and financial resources to be involved for the revival of DHA Cogen power project, which is shut since May 2010.