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ISLAMABAD: A panel comprising officials from Power Division and its attached Organisations has recommended premature termination of Power Purchase Agreement (PPA) of Hubco power plant but opposed such action with other 10 IPPs, sources close to Managing Director PPIB told Business Recorder.

The Cross Functional Committee headed by Additional Secretary-II Power Division and comprising MD PPIB, Director Legal PPIB, General Manager (SO) NPCC, General Manager (Power System Planning) NTDC, CFO, CPPA-G, Chief Legal Officer, CPPA-G, Chief Technical Officer, CPPA-G and Manager (Policy & Planning) CPPA-G had been constituted on April 30, 2021 to consider such termination proposals and propose future course of action after conducting detailed legal, technical, and commercial analysis within the parameters of Implementation Agreement (IA), and Power Purchase Agreement (PPA).

The Committee was tasked to consider and evaluate the pre-mature termination proposals of following 11 IPPs and to propose the future course of actions after considering detailed legal, technical and commercial aspects within the parameters of IA and PPA: (i)Hub Power Company Limited; (ii) AES LalPir Limited; (iii) AES Pakistan (Pvt) Limited (Pakgen); (iv) Kohinoor Energy Limited; (v) Saba Power Company Limited; (vi) NishatChuian Power Limited; (vii) Nishat Power Limited; (viii) Liberty Power Limited; (ix) Atlas Power Limited; (x) Hub Power Company Limited (Narowal); and (xi) Attock Gen Limited. The Committee in its first meeting deliberated in detail and provided opportunity to NPCC to present the utility of those plants for the System Operator in the context of system constraints, system stability, demand and supply situation and maintaining the integrity of the system.

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NPCC was also asked whether these 11 IPPs can be terminated imminently. NPCC stated that in 2021 all of those plants would be needed to maintain the system requirements, as 1700MW of GENCO capacity was being taken offline, and if that 3300 MW was also removed immediately it would potentially breach the system reserve capacity requirement. However, NPCC emphasized to run a scenario analysis for a longer duration which would include the capacity additions that are expected to come online from 2022. Additionally, NTDC was of the opinion that once IGCEP was approved, informed decision on the viability of those projects for their grid operations, as well as considering the 132Kv network constraints from Discos, would be easier.

At present system installed capacity is 36,116 MW, system dependable capacity is 32,613 MW but the system available capacity is 22,271 MW which is 61 percent of installed capacity and 68 percent of dependable capacity. This drastic reduction in available capacity is caused by factors like hydrology/lower IRSA indents plant scheduled outage, plant forced outages/non-supply maintenance of required fuel intermittent variable renewable energy and power evacuation limitations etc. Therefore, depending on the factors described along with period/season of year, the available capacity may fall significantly posing serious risks of loadshedding/system disturbances.

It was further added that hydropower plants capacity starts increasing gradually with rise in hydrology/reservoir level and by mid-July hydel generation reaches maximum capacity. On the other hand, the system demand starts increasing at the advent of hot weather in April and to cater to it most of the RFO fuel based power plants (with installed capacity 6274 MW both IPPs & GENCOS and forming 17.37 percent of installed system capacity of 36116 MW) operate on system demand as per merit order. The rule curve followed by Mangla to attain the peak reservoir level in accordance with IRSA requirement restricts it to share maximum generation in the extreme hot weather due to less water indents allocation by IRSA.

At present most of the Discos are not drawing power according to their respective load demand due to policy load management (about 20 to 25 percent of system demand) being carried out on account of ATC (aggregated technical &commercial losses) and network constraints (transmission & distribution). With the improvements in transmission and distribution network, if at any stage in future these Discos start drawing full powers as per their demand or demand grows in industrial/commercial/domestic sector, the available power capacity would/may hardly be sufficient to meet power demand.

The Committee’s attention was also warranted towards recent agreement between KE, CPPA-G and NTDC as per government policy through which an extra 450 MW power is being supplied to KE from NTDC network thus enhancing the overall exchange from 650 MW to 1100 MW besides 150 MW power being delivered through three wind power plants. The quantum of power exports from NTDC network to KE will further increase to up to 2023 MW. NTDC further represented that most of power plants, except Hubco (1200 MW Plant located in Hub, Balochistan), are critical for system stability. Thus termination of such capacity may constrain system stability. NTDC argued that those plants having annual dispatch of less than 10 percent may be considered for termination and at present only Hubco falls in such category.

CPPA-G informed the Committee that Hubco has already approached them for early termination but the compensation being demanded does not make much commercial sense from their perspective. The Chair replied that in case Hubco termination is recommended by the Committee then a separate committee can pursue commercial negotiations with Hubco. After discussions in different sessions, the Committee agreed with the point of view of NTDC and accepted the recommendation of NTDC/NPCC that most of the plants under consideration are critical for system stability and load management and that plants having annual dispatch of less than 10 percent may be considered for early termination.

Accolding1y, Hubco is the only plant that has annual dispatch of less than 10 percent therefore; it may be considered for eerily termination.

The committee endorsed NTDC opinion that power system grid stability and security get affected by removal of other plants from the system and if those plants were to be shut down in near future additional investment will be required to build new grid stations for system stability. Therefore, the Committee recommended that an independent consultant be hired to do a proper study on the impact of early termination of plants together with the health of the transmission system.

The Cross Functional Committee has also proposed formulation of a separate committee by the competent authority to negotiate and evaluate termination compensation and payment mechanism in case of Hubco’s early termination.

Copyright Business Recorder, 2023

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MalikSaabSays Jan 30, 2023 09:11am
Those taking imported fuel and hefty capacity payments should be first to have their PPAs terminated.
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