CPPA needs a push

There are no two opinions when it comes to Pakistan moving towards a competitive electricity market system. However, when it comes to the institution charged with execution of this transition, the Central Power Purchasing Authority (CPPA-G), there are many reservations across the board.

The most worrying indications come from none other than the power regulator itself. Even though Nepra has recently approved the application of the CPPA-G to become a market operator, it has expressed reservations about the past performance of the entity and its ability to successfully carry out the integral functions of the envisaged market operator.

There is much evidence that points to the lethargic attitude of the CPPA-G. The entity was tasked to carry out the transition towards a competitive market in a phased manner. According to the original schedule, the single buyer model was to cease in 2015, followed by a single buyer plus model from 2016-2020 and fully competitive market by July 2020.

The second phase was to deploy a single buyer plus model which involved bilateral contracts between generation companies and DISCOs. However, Nepra notes this framework is still in thin air with CPPA still executing long-term power purchase agreements (PPA) rather than delegating this power to the DISCOs. This results in undermining the role of market operator to begin with.

Nepra has also highlighted other issues regarding the performance of CPPA-G during the two year period since May, 2015 when it assumed the role of market operator pending registration as a formal market operator which happened recently. (Read: CPPA-G becomes market operator published on 07 December, 2018)

It notes that the CPPA has “continually acted in an ad-hoc and discriminatory manner towards various IPPs and other power projects” and points to the refusal of the entity to give the go-aheads on power projects especially bagasse and hydro based, despite the tariffs and licenses already granted by Nepra.

Then of course is the issue of renegotiating existing PPAs with IPPs to become compatible with the competitive market based model. This is an important task to execute if the matter is to move forward but CPPA-G has provided no comprehensive plans on how it tends to go about novating existing PPAs.

Then there is the general professional disregard which includes non-submission of settlement reports and violations of the reporting mechanisms to the regulator since the CPPA-G came into being.

Such performance is discouraging when the matter at hand is complex and of paramount importance given that it will decide how the power sector in Pakistan will move towards a competitive market based model.

The transition has already been delayed by the ineptness shown and the new Energy Minister Omar Ayub should ensure the necessary capacity building of CPPA-G takes place and the organisation gets a move on!