What becomes of the disallowed cost of power generation on account of furnace oil, will be clear in a month or two. Nepra had stayed the fate of furnace oil related costs in the fuel cost adjustments for September 2019, subject to provision of information by the Central Power Purchasing Agency (CPPA) and National Power Control Centre (NPCC), on November 5, 2019.
The NPCC and CPPA were earlier asked by Nepra to submit detailed responses so as to justify the furnace oil based generation, which had grown during July and August and continued till October. The hearing was adjourned to a later date, as CPPA and NPCC failed to comply with Nepra’s directions – particularly the one relating to the financial impact of furnace oil based generation.
Apparently, the response to justification of the RFO based generation which resulted in continued violation of merit order was submitted to the authority. Unsurprisingly, the response lacked clarity, and was not in the required format as so to help Nepra conduct any “meaningful analysis or drawn any conclusion.” It is expected that the by next FCA hearing, Nepra would have detailed daily log in the requited format, so as to ascertain the justification of FO based generation.
What was Rs2.98 per unit asked upon submission of data, became Rs1.82 per unit increase for September 2019. But it may all change soon for the worse if the justification is good enough. Furnace oil is being produced regularly by the refineries, and the authorities will find one way or another to justify procuring it to produce power from the rather inefficient and expensive fuel source.
There a fair chance of the RFO amount excluded from tariff adjustment to be included, based on the initial response from NPCC representative. That the RFO consumption has gone down considerably in the last year or so is not a secret anymore. That there is no load shedding is also well acknowledged, as the capacity to generate has been adequately added in the last three years. It is also heartening to note that there has been zero RFO usage since October 2019 – which should bode well for upcoming FCAs, and the upward adjustment earlier deferred could be made in October or November.
The whole episode is a stark reminder that more than anything, it is the transmission system that needs a massive overhaul. Expansion should continue simultaneously to cater for the added power flow, but any addition without requisite modification will continue resulting in inefficient fuel sources being used for power generation. The current transmission system does not have enough capacity to accommodate maximum generation from three RLNG plants, which are now a key element of the base load. This is what causes the system to rely on RFO based generation, to manage the load.
There is no bigger example of extreme unprofessionalism and foresight, as the base load was being formed around RLNG, but the transmission system was all tilted towards managing RFO based load. One hopes 2020 will be lot better than this. Energy affordability is already a problem due to a variety of issues, and transmission side would do well to reduce some of the burden.
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