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ISLAMABAD: National Transmission and Despatch Company (NTDC) is said to have given its consent for provision of additional power to Karachi Electric (KE) for summers 2021 and 2022 with reservations on billing mechanism by CPPA-G, well-informed sources told Business Recorder. NTDC has recently energized 130km-long 220 KV double circuit transmission line from Jamshoro to KDA-33 after necessary testing. The completion of transmission infrastructure will result in an increase of 450MW power supply from the national grid. The government has committed to KE that it would provide 1400MW additional power to KE by 2022, of which 450MW will be ensured in the first phase.

Power Division, which will submit a summary to the ECC for approval of additional power to the KE, wrote a letter to NTDC on April 6, 2021 regarding approval of arrangement of additional power from NTDC to K-Electric for summers 2021 and 2022.

In this regard, NTDC has conveyed its consent to the proposal for the ECC with the exception of its reservations about stipulations of invoicing mechanism proposed under the draft Power Purchase Agency Agreement (PPAA). Relating thereto, definition of term 'invoice' under section 1.1 of the PPAA has been reproduced as follows: “invoice" means the bill issued by NTDC through CPPA-G to K-Electric for the Use of System Charge (UoSC) and bill issued by CPPA-G to K-Electric for Market Operator fee during billing month in the prescribed format. We understand that Commercial Code 2015, applicable in this regard, issued by Nepra , provides an explicit mechanism about roles to be performed by NTDC, CPPA-G and market participants representing demand (Discos including K-Electric) under which NTDC has to provide data/information to CPPA-G, necessary for issuance of invoice by CPPA-G to market participants representing demand (Discos including K-Electric). NTDC’s submissions in this regard, have already been conveyed to CPPA-G on March 25, 2021,” said, Managing Director NTDC in a letter to the Federal Government.

NTDC has suggested the following changes in the draft PPAA: (i) an alternate definition of term 'invoice' compliant with the code, has been suggested which is as follows: “invoice" means the bill issued by CPPA-G to K-Electric, during the billing month, (a) on account of UoSC based on data/information furnished by NTDC to K-Electric and (b) Market Operator fee in the prescribed format; and (ii) the words in bracket “(to NTDC through CPPA-G)" in Section 6.2.1 may be deleted. Furthermore, the definition of term 'contracted products' under section 1.1 contains the text 'base load nature' may be replaced with 'firm and on pro-rata basis'.

NTDC has expressed the hope that Ministry of Energy will take into consideration its stated submissions while soliciting approval of a summary from ECC for arrangement of additional power from NTDC to K-Electric, accordingly.

NTDC maintained that in light of the current legal and regulatory regime, (UoSC) for the transmission provided to the Discos including KE is rightly being invoiced to CPPA-G and accordingly shall be settled by the CPPA-C. In case any alternate arrangement is being considered, NTDC’s submission and assertions may be kept in view.

Furthermore, with respect to the issue of tax deduction by the Discos , including KE, and successively by CPPA-G while making payment to NTDC, which in NTDC's view is unfair in light of the provisions of SRO 586/1)191, considering the fact that CPPA-C is acting as an agent on behalf of the Discos including K-Electric. This view, has also been appreciated by the Islamabad High Court by granting interim relief to NTDC and restraining CPPA-G from depositing the withheld tax amount with FBR in lieu of UoSC.

Copyright Business Recorder, 2021