ISLAMABAD: Central Power Purchasing Agency–Guaranteed (CPPA-G) on Wednesday revealed that State Bank of Pakistan (SBP) is reluctant to approve forex payments of imported coal due to pressure on reserves.
This information was shared by Chief Executive Officer (CEO)/ CFO, CPPA-G, Rehan Akhtar during a public hearing on Fuel Charges Adjustment (FCA) of Discos for September 2022.
The Authority has approved Paisa 9.36 per unit (total impact Rs 1.1 billion) for September against CPPA-G request of Paisa 20.46 per unit.
The issue of coal conservation arose when NEPRA’s Monitoring and Enforcement (M&E) noted that NPCC conserved imported coal in September on the instructions of Power Division due to which coal generation was less than projections.
General Manager, National Power Control Centre (NPCC) Sajjad Akhtar, briefed the Authority comprising Chairman Tauseef H Farooqi, Rafique Ahmad Shaikh and Maqsood Anwar Khan that both Hub China Power Plant and Sahiwal Coal Power plant are not operating and at the same time the government has reserved imported coal to be used in winter months. He said coal stock position has improved in October adding that coal supply position will be better in the winter due to conservation.
Sajjad Akhtar stated that supply of Afghan coal was not up to the mark for Sahiwal and China Hub. In this regard, he cited a meeting presided over by Secretary Power, also attended by the representatives of coal supplier and both imported coal-fired plants. He said after deliberations, Afghan coal supplier agreed to ensure uninterrupted supply. He said Power Division also directed that coal should not be imported.
Chairman NEPRA enquired if the decision to conserve coal has been taken on verbal instructions of Power Division or were there any written instructions? General Manager NPCC stated that it was done on written instructions. Chairman NEPRA directed NPCC official to share the document related to conservation of coal with the regulator.
CEO CPPA-G, the market operator, took the floor and explained the reasons for conservation of imported coal.
“Power Division reached this decision to conserve South African coal because SBP is not approving payments, with approval of LCs of July and August 2022 still pending. The day, LCs of this high volume are retired, a sudden fluctuation of exchange rate is witnessed in the market. This is the reason imported coal, especially, South African coal was reserved for the winter months,” said CEO/ CFO CPPA-G. He said approvals of $85 million of coal power plants are pending with SBP.
He further contended there were some disruptions in import of coal in Pak Rupees from Afghanistan due to fighting on the border which claimed two to three lives. However, now supply of coal from Afghanistan is normal.
An unpleasant occasion was also witnessed during discussion on a presentation given by NPCC on deductions by NEPRA under the garb of under-utilization of efficient power plants and response time to deal with fluctuation in demand and supply. However, Chairman NEPRA stopped the “fight and use of harsh words” during the hearing.
NPCC officials maintained that sometimes within minutes the load increases, forcing expensive plants to operate.
Chairman NEPRA supported the viewpoint of NPCC saying that in such a situation the merit order is violated. He directed M&E team to audit use of RLNG in power plants and its financial impact on consumer tariff. The Authority was informed that the financial impact of violation of ECO was Rs 3.9 billion.
Copyright Business Recorder, 2022