Turkish RPP: its old; its expensive

The rentals are back in the news - the claims, the rebuttals, the clarifications - its all over the media. The lavish inauguration ceremony attended by front row leaders made it look more than a mere 1 percent addition to the national power grid. But that makes sense, as the government is the biggest proponent of rental power plants.
The man at the forefront of the rental plants episode tried to delight the Karachiites by saying that the mega city would receive additional electricity from this project. It only added another badge of embarrassment to his shelf, which now appears to be pretty crowded, as the KESC later corrected that Karachi would continue getting the 650 MW, which it currently gets.
But there was another remarkable statement made by Raja Pervez that went surprisingly unnoticed: Raja claimed that the Turkish plant would not lead to a rise in overall electricity tariffs. But he can be forgiven, as his only sin appears to be ignorance. What else can be thought of the Federal Minister for Power when he treats the
ental capacity cost as the final tariff?
The fact that he repeatedly told the media that Pepco would purchase electricity at 5.69 cents per unit, clearly states his lack of knowledge on the matter. The consumers would give anything to rent electricity at such cheap rates, but that, sadly, is not true as the final tariff appears to be on a much higher side.
Official documents submitted to Nepra back in October 2009, and the governments official response to the ADBs evaluation report on RPPs in January 2010 quote entirely different tariffs for the Karkey Karadeniz plant.
The tariff determination request quotes 10.2 cents per unit energy charges in addition to the rental charges component of 5.79 cents per unit. The resulting 16 cents per unit comfortably beat Rajas dream tariff of 5.6 cents per unit. But hold on - the energy charges component is based on the furnace oil price of Rs26,000/ton and the rupee-dollar parity at 62.
The furnace oil price is heating around Rs60,000/ton currently, whereas a dollar equals 86 rupees. Needless to say, the energy charges will balloon significantly and will be well over 20 cents per unit. Bear in mind, the rental charge component will also be there as a fixed charge.
In response to the ADB, the government threw a figure of 13.09 cents per unit based on furnace oil price of Rs44,800/ton, in addition to 5.98 cents as the fixed charge. It should be noted that the Karkey RPP was labeled as the most expensive plant by the ADB in its evaluation report. The minister should state the truth about the RPPs, as the saga has already dented his credibility to a large extent.
Raja Pervezs lack of information spreads even further as he went on saying that there was no advance payment for the Karkey plant - a statement that couldn be more farther from the truth. The ADB report, the governments response on the report, and Nepras document - all state in black and white that there was a 14 percent advance made to Karkey.
Moreover, the Karkey plant has been in operation for more than 10 years, which violates the Nepra guidelines for RPPs, according to which the plant should be less than 10 years old and having less than 60,000 operating hours. This also negates claims by some circles that it is a brand new plant that Pakistans friend Turkey has sent.
One hopes, there will be some penalties on the late commissioning at the least; Karkey was supposed to be in operation by June 2010. Given irregularities of bigger nature, the chances of any penalties appear dim. And yes - they are talking of more RPPs soon. Perhaps, Faisal Saleh Hayat would soon be seeing the courts again.