Inefficient power plants: Nepra accuses MoE of passing on Rs30bn burden to consumers

ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has reportedly accused Ministry of Energy of passing “unjustified” financial burden of Rs 30 billion to consumers by not supplying required RLNG or operating of inefficient/ expensive power plants during the last two years, well informed sources in Nepra told Business Recorder.

The power regulator, sources said, has written a letter to Secretary Power Division in which his attention has been drawn towards the shortage of RLNG supply to the power sector over the last two years and the resulting financial impact due to operation of expensive power plants.

Nepra is regularly monitoring the deviations from the Economic Merit Order (EMO) carried out while giving dispatch to power plants.

Nepra, sources said, in its letter has stated that during the analysis, it has been observed on various occasions that certain RLNG power plants are unable to generate energy as per their full potential due to shortage of RLNG supply. Resultantly, the system demand is fulfilled through operation of costlier/ inefficient power plants that are lower in merit order as compared to RLNG plants. This results in a net increase in the generation cost for a given month and ultimately increases the end-consumer tariff.

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For this purpose, NTDC (NPCC) has been regularly claiming that shortage of RLNG as a major reason for its operation of plants on alternate fuel/ operation of expensive power plants. In this regard, NTDC (NPCC) has submitted that it shares the RLNG requirement for the upcoming months with the concerned quarters well within time for effective planning.

However, due to shortage of RLNG supply to the power plants, expensive/ inefficient plants are operated to meet the system demand.

According to Nepra, over the course of past two years, an estimated amount of Rs. 30 billion has been incurred due to shortage of RLNG and subsequent operation of expensive/ inefficient power plants. This cost has been passed on to the consumers through the relevant FCAs; however, the Authority considers this amount to be an additional burden on the electricity consumers. Therefore, an early resolution of the issue will be beneficial for the country in general and for electricity consumers in particular.

In view of the existing scenario, the power regulator has advised Ministry of Energy (Power Division) to coordinate with Ministry of Energy (Petroleum Division) to ensure RLNG supply to efficient power plants, as per their requirement and as per Economic Merit Order, so that the efficient plants capacity is fully utilized and generation through expensive/inefficient power plants is stopped, immediately.

Member NEPRA (Sindh) Rafique Ahmad Shaikh, in his dissenting notes in the recent past stated that it is authenticated from the date of National Power Control Centre (NPCC) that it is getting less supply of RLNG against its demand usually conveyed to the relevant quarters several months before.

According to him, RLNG being imported fuel can be managed/ ensured through better supply chain management and accordingly impact of such mismanagement into the non-availability of RLNG can not be passed on to the consumers.

Copyright Business Recorder, 2022