Bagasse-based power project: CPPA-G grilled by power regulator

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday grilled the Central Power Purchasing Agency–Guaranteed (CPPA-G) over what it termed discriminatory treatment towards a bagasse-fired power company in extending incentives already available to similar plants.

The issue surfaced during a public hearing on a tariff modification petition filed by Shahtaj Sugar Mills Limited (SSML) for its 32 MW bagasse-based power project.

The Nepra panel, comprising Chairman Waseem Mukhtar, Member (Tariff and Finance) Amina Ahmed, and Member (Development) Maqsood Anwar Khan, officiated the hearing.

READ ALSO: Baggasse-fired IPPs: Nepra set to approve 60% hike in FCC

In its petition, SSML stated that its approved tariff is based on a net annual plant capacity factor of 45 percent.

The company requested the Authority to approve a revised mechanism under which, if in any given year the net annual capacity factor falls below the 45 percent threshold, it may be allowed to compensate for the shortfall in subsequent years (within a five-year bracket).

The proposal seeks permission to recover debt servicing costs for generation beyond 45 percent in later years to offset earlier deficits.

SSML representatives argued that such a facility is already available to other bagasse-fired power plants and urged Nepra to ensure equal treatment.

Director General (Tariff) Muhammad Yousaf briefed the authority on the background of the petition.

During the hearing, CPPA-G representative Aamir Bashir stated that the agency had initially agreed to the proposal. However, after Nepra disallowed it, the clause was excluded from the Power Purchase Agreement (PPA). He maintained that inefficiency in one year cannot be compensated in subsequent years.

He further noted that other power companies had surrendered 30 percent efficiency gains under revised agreements, whereas SSML had no such provision for generation beyond the 45 percent benchmark.

Nepra members, however, did not endorse CPPA-G’s stance, pointing out inconsistencies in the treatment of similar plants.

Member (Tariff and Finance) questioned CPPA-G’s earlier undertaking that any efficiency gain approved by Nepra would be incorporated into the agreement.

In response, the CPPA-G representative stated that any decision of Nepra would override the provisions of the PPA, even if it contradicts the agreement.

“You are saying the clause was excluded from the PPA following Nepra’s earlier decision. Now, when the authority is asking to include it, what happens to CPPA-G’s agreement?” the Member (Tariff and Finance) asked.

The CPPA-G representative claimed that the agency had already submitted its position to Nepra in 2024 regarding SSML’s petition.

However, Nepra officials stated that such comments were not available on record. CPPA-G assured the authority that the relevant documents would be traced and submitted.

After detailed deliberations, Nepra granted CPPA-G one week to respond to the questions raised during the hearing.

The petitioner was also directed to submit detailed replies to comments filed by interveners, including FCPPCI and Rehan Javed, who were not present to explain their submissions.

Copyright Business Recorder, 2026