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ISLAMABAD: National Electric Power Regulatory Authority (Nepra) is reportedly irked at non-approval of Gas Supply Agreement (GSA) and Power Purchase Agency Agreement (PPAA) between Karachi Electric (KE) and Federal Government entities as delay in signing the agreements are depriving cheap electricity to the economic hub of the country.

During a public hearing a few days ago on the matter of Fuel Charge Adjustments (FCA), the apparent lack of progress on K-Electric’s PPAA with the Central Power Purchasing Agency-Guaranteed (CPPA-G) along with other contractual modalities for off-take of supply from National Grid, and GSA with SSGC also came under debate as Chairman NEPRA Tauseef Farooqui expressed his concern and questioned K-Electric’s teams on the reasons for delays.

The status of both agreements regularly comes under the Authority’s scrutiny during FCA hearings to assess impact on consumers. Amid soaring electricity prices on the back of increased fuel costs, the absence of firm governing documents underpinning the relationship between entities is a critical issue which is bearing down on customers and businesses alike.

KE’s management told the Authority that the contractual arrangements with GoP entities for off-take of power from National Grid were in last stage of approvals from the Government.

A draft summary for CCoE along with initiated draft agreements were moved for stakeholder comments on November 17, 2021. Since then, it awaits inclusion in the CCoE’s agenda for discussion and approvals.

The newly appointed Secretary Power Syed Asif Hyder Shah convened an internal meeting last week to get an overview of proposed agreements with the KE but the meeting was postponed due to his other pressing engagements.

The sources said that comments of all the concerned stakeholders have already been received in Power Division but the summary has not yet been placed before the Cabinet Committee on Energy (CCoE) due to some unforeseen factors.

K-Electric’s Power Purchase Agency Agreement is the governing document underpinning the provision of additional power from the National Grid taking the total supply to 2,050 MW. Considering the surplus power in the National Grid, it was proposed to channel this power to Karachi and directions were given by the GoP that KE absorbs excess power available in the National Grid in the national interest.

Power Division officials maintained that additional supply to KE will ease the burden of capacity payments currently being borne by the Government. KE was also asked to cancel plans of setting up own generation projects including a 700MW Coal fired plant for which regulatory approvals were already in place.

In response to a query, a spokesperson for KE reiterated that cooperation had been assured by all stakeholders involved, but he was unable to provide a firm timeline for expected approval.

Copyright Business Recorder, 2022

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