Federal government's Re-gasified Liquefied Natural Gas (R-LNG)-based small power projects' plan has reportedly failed as only one company has fulfilled the pre-requisite criteria, well informed sources in PPIB told Business Recorder. A couple of months ago, Economic Co-ordination Committee(ECC) of the Cabinet had approved a plan meant to set up RLNG-fired small power projects of 100-250 MW with a cumulative capacity of 1000 MW based on International Competitive Bidding (ICB).
PPIB, sources said, initially gave one month time to the interested parties to obtain documents and submission of letters of Intent (LoIs). However, PPIB extended the date for two weeks as the response from investors was not encouraging. The sources said, 25 companies obtained documents from the Private Power & Infrastructure Board (PPIB); however, three companies ie Nishat Power, Atlas Power and Fatima Power submitted LoIs with the PPIB.
According to sources, only one company, ie, Atlas Power submitted the required documents to the PPIB, which were cleared by a scrutiny committee. M/s Fatima Power submitted the copy of performance guarantee instead of original document. The committee gave sufficient time to the company for submission of original document but that did not happen. Likewise, Nishat Power Limited obtained papers to set up a project in Multan but submitted the papers for Faisalabad. The scrutiny committee rejected papers of both the companies. Now, only M/s Atlas Power is in the field which plans to establish RLNG-fired power plant of 220 MW in Sheikhupura.
Giving the background, the sources said, the original plan approved in a meeting held under the chairmanship of Minister for Finance Senator Ishaq Dar with participation of Minister for Water and Power Khawaja Asif and Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi envisaged to induct a new medium-sized (100-250 MW) power plants with R-LNG. It had also been decided that the proposed plants will either be located at the existing sites of old/ abandoned Genco plants or in the vicinity of existing grid stations/transmission lines of NTDC/Discos, while considering gas supply network of SNGPL/SSGCL infrastructure facilities, etc.
In order to further deliberate the modalities for the R-LNG initiative, a series of meetings was held in the Ministry of Finance under the chairmanship of Minister for Finance wherein key decisions were made and the procedure for implementation of the R-LNG-based projects as well as key parameters for the bidding process were deliberated in detail and agreed. PPIB was directed to initiate work on the R-LNG projects, the sources continued.
The meeting further decided that the bidders will be required to offer a discount on Nepra's determined upfront tariff for gas turbine-based combined cycle power plants using R-LNG as fuel in its decision of April 3, 2015. The project sponsors will be required to achieve Open Cycle Operations by March 31, 2017 and commercial operations (in combined cycle mode) by January 31, 2018.
The power projects' initiative will be processed and implemented under the power generation policy 2015. In this regard, various meetings were held amongst the stakeholders and a draft framework setting out key parameters and procedures deliberated. Due to specific nature of R-LNG supply chain, several issues including a firm commitment of R-LNG supply, confirmation of R-LNG availability, responsibilities and consequences with regard to non-supply event of R-LNG, minimum "take or pay" quantities of R-LNG, minimum guaranteed dispatch, tariff on HSD during open cycle operations, residual issues related to Nepra, SNGPL/SSGC, CPPA(G) and various others, emerged.
In order to resolve confronting issues, a final meeting was held in the Ministry of Finance under the chairmanship of Minister for Finance on January 13, 2016, in which key decisions were taken on these issues. The Power Generation Policy 2015 provides for standardised security package documents for power projects in the private sector. These draft standardised security package documents for R-LNG-based power projects comprise Implementation Agreement (IA) and Power Purchase Agreement (PPA) which provide a legal and contractual framework for the financial closing, engineering, procurement, construction, commissioning, operation, and maintenance on Build, Own and Operate (BOO) basis of such power projects.
When contacted, a spokesman for PPIB said that 220 MW R-LNG based IPP at Sheikhupura by Atlas Power ltd. GoP invited bids for five projects with a cumulative capacity of approximately 1000 MW. Bids were received, one each for Faisalabad, Multan and Sheikhupura sites. The bid submitted by Atlas power ltd. (APL) for 220 MW IPP at Sheikhupura was found technically responsive. Based on the parameters and assumptions given in the RFP, APL has offered a discount of 0.14 Rs /kWh on the NEPRA upfront tariff.
Nepra has declared APL as the 1st ranked bidder (successful bidder) through its notification of May 11, 2016. PPIB has advised APL to approach NEPRA for tariff approval and submit application for generation licence.