Independent power producers: Govt to assess generation cost, consumer bills

Water and power ministry to conduct audit of IPPs.

ISLAMABAD:

After putting trillions of rupees in the power sector, the government has decided to initiate a probe to assess the generation cost and the amount billed by independent power producers (IPPs).

Similarly, India also started a performance audit on fuel linkages to the IPPs in September this year. It will cover a period of five years from 2009-10 to 2013-14.

The Pakistan government is also likely to follow the same model to evaluate the cost of power generation by the IPPs.

According to sources, the government wants to know per unit cost of power production being charged by the IPPs and the energy consumed to generate per unit of electricity.



The previous government of Pakistan Peoples Party (PPP) had also launched an energy audit of the IPPs and captive power plants operating on gas, but the findings were not made public.

That government had decided to charge a higher gas tariff or cut off supply for failure to meet the desired efficiency benchmarks. The benchmark had been set at 60% for gas engine and gas turbine based on co-generation technology and 50% for combined-cycle plants having capacity of more than 50 megawatts.

Power producers, which failed to achieve the desired efficiency benchmark, were given three months to improve their performance. In case, they were not able to do so in the required period, a grace period of another three months was to be given with an option to pay the penalty equivalent to the tariff notified by the Oil and Gas Regulatory Authority (Ogra) or face disconnection.

Since the Musharraf regime, the governments had paid over Rs2 trillion to the power sector on account of subsidy.

Officials suggested that power distribution companies should also be taken to task because of inefficiency and power theft as honest consumers were paying the cost.

Sources said Prime Minister Nawaz Sharif had directed the Ministry of Water and Power to conduct an audit of the IPPs to investigate the generation cost per unit and the energy consumed for power production.

They pointed out that many efficient power plants including Saif, Halmore and Orient with 54% efficiency were shut down due to unavailability of gas whereas captive power plants with 18% to 20% efficiency were provided gas.

Earlier, gas companies had suspended supplies to the captive power plants owned by textile lobbies but the premier intervened for restoring supplies.

As efficient power plants were shut down due to unavailability of gas, the consumers were paying a high tariff as the IPPs were running on expensive fuel oil and were also facing prolonged outages.

“It is a crime that inefficient power plants are being provided gas whereas efficient ones are closed,” an official said, adding during the PPP government, the National Accountability Bureau (NAB) had initiated an investigation into provision of gas to different sectors and termed a “criminal act” the supply of gas to inefficient power plants at the cost of efficient ones.

Published in The Express Tribune, December 6^th,  2014.

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