Karkey Rental Power Plant: Pepco buying power at Rs 41 per unit

Pakistan Electric Power Company (Pepco) is purchasing power from 231MW Karkey Rental Power Plant at the rate of Rs 41 per unit, after the Ministry of Water and Power and Pepco failed to supply fuel to the plant as per agreement. This was disclosed at a public hearing organised by National Electric Power Regulatory Authority (Nepra) on fuel charges adjustment for May 2011 for ex-Wapda Distribution Companies (Discos).
The regulator increased power tariff by 61 paisa per unit for May 2011 under the monthly fuel adjustment formula. A Nepra spokesman told Business Recorder that in real terms existing applicable electricity tariff will be reduced by 41 paisa per unit which was raised by Rs 1.07 per unit for April 2011. Pursuant to section 31(4) of Nepra Act (XL of 1997) and the mechanism for monthly fuel price adjustment prescribed by the authority in the tariff determinations of Discos, the authority has to review and revise the approved tariff on account of any variations in the fuel charges on monthly basis.
During the hearing it was disclosed that the current price of power being purchased from Karkey Rental Power Plant, installed at a ship, is about Rs 41 per unit as load factor in May has been noted at 18 percent. Total generation capacity of the plant is 231 MW.
Karkey is being paid Rs 26.37 per unit as capacity charges and Rs 15.48 per unit as cost of per unit power generation. According to the Power Purchase Agreement (PPA), the power purchaser is bound to pay an amount of $9 million to the power plant as capacity charges. So far, the government has to pay $18 million to the plant for April and May 2011.
Nepra has refused to allow payment of $9 million per month as capacity charges to the RPP and directed the Ministry of Water and Power to review the contract or supply fuel for full power generation. "It will be a mega scam as the power plant is being paid billions of rupees per month against 30 MW power," commented one of the officials on condition of anonymity.
According to him, the consumers will have to pay the cost of gross negligence by the Ministry of Water and Power and Pepco. The officials of Central Power Purchase Agency (CPPA) present in the hearing apprised the authority that the plant''s generation is 30MW because, fuel is not being supplied to the plant which is the responsibility of the power purchase ie CPPA. Banks have refused to give credit for the power sector.
According to the budget estimates, the government will increase power tariff by at least 12 percent during the current financial year to keep subsidy for inter-Disco differential tariff within the limit of Rs 50 billion earmarked in the federal budget. Officials in the Ministry of Water and Power told this scribe that the tariff is expected to be increased by three percent in July or August as first step but no date has been fixed as yet.