Business

NTDC buys expensive energy, incurs losses

Details reveal efficiency and cost take back seat in buying electricity from IPPs

Our Correspondent March 02, 2016

Details reveal efficiency and cost take back seat in buying electricity from IPPs PHOTO: REUTERS

LAHORE: The National Transmission and Despatch Company (NTDC) is continuing to incur exorbitant losses as it buys up expensive electricity and systematises inefficiencies.

In order to prioritise which plants will be utilised first, a merit list is formed that comprises 38 different independent power producers (IPPs). Plants ranked 1st and 2nd will be utilised first and most while the one ranked 38th might be left dormant for a longer duration.

Similarly, in order to gauge cost effectiveness of an independent power plant (IPP), plants are ranked in economic order. The 1st and 2nd ones will be the most cost effective; while 38th will be the most costly.

In principle, it would be economically efficient if those IPPs that are highly cost effective are highly prioritised on the merit list. Similarly, costly ones are pushed back on the merit list. So for instance those ranked 1st or 2nd in the economic order should be similarly ranked 1st or 2nd on merit.

However, this is not the case where NTDC is concerned.

This was even noted by a reported inquiry conducted by National Electric Power Regulation Authority (NEPRA) that hinted at gross inefficiencies when it discovered that costly electricity was being purchased by four IPPs.

As per the latest report for the month of December 2015, the one-month statement on ‘Generation versus Economic order’ revealed gross inefficiencies.

According to the details, the top producer for NTDC was 21st in economic order, while the Uch Power Plant ranking 1st in the economic order was placed 7th number on the merit order.

Attock Gen was given 2nd despite its lower ranking on the economic order (14th), while Liberty Tech ranking a dismal 30th on the economic order was placed 12th in the merit order by NTDC.

Moreover, Liberty Power, 18th on the economic order, was placed 4th on the merit order.

Davis Energen, ranking a deplorable 21st on the economic order, was placed 1st on the merit order. Similarly, Lakhra, ranked 5th most cost effective, was placed 24th on the merit list.

The list drags on, confirming NTDC’s inefficient, if not altogether misplaced, priorities with regards to cost saving and positively contributing to the national economy.

It is pertinent to note that the power cost has two components: capacity price and energy price.

Capacity price is paid by the government for making plants available to NTDC.

Energy price is the fuel cost and variable portion of operations and maintenance.

Published in The Express Tribune, March 2^nd, 2016.

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COMMENTS (1)

ishrat salim | 8 years ago | Reply There are many reasons for such action, some are : 1) Lack of experts in the field, thus venerable to make such un-desirable decisions, from top to bottom. 2) Political appointed people make such decisions. 3) Inefficient & lack of leadership, thus take decisions under influence instead of merit. And the list is long. We all know where the fault lies, but are we prepared to do any thing except exposing such anomalies in media. What is needed is collective concerted, honest effort on the part each one of us to put pressure on our lawmakers & elected representatives to correct the wrong 2) we must exercise our right to vote on the election day, otherwise, we cannot claim & criticize any of the politicians.

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