Fatima Energy officials meet PM to seek tariff approval

Company has converted its captive power plant into an IPP of 118.8MW

ISLAMABAD: Fatima Energy is seeking approval of an interim tariff for its power production plant and has held two meetings in this regard with Prime Minister Shahid Khaqan Abbasi over the past few days.

However, Private Power and Infrastructure Board (PPIB) and Central Power Purchasing Agency-Guarantee (CPPA-G) have rejected Fatima Energy’s plea, fearing that the go-ahead for the interim tariff would invite investigation from the National Accountability Bureau (NAB).



According to officials aware of developments, Minister for Power Division Awais Ahmed Khan Leghari supports Fatima Energy’s case and wants the CPPA-G board’s nod for the interim tariff before the current Pakistan Muslim League-Nawaz (PML-N) government completes its tenure at the end of this month.

But Power Division Secretary Naseem Khokhar, who was also the CPPA-G board chairman, has already rejected the tariff application a few days ago.

Earlier, former prime minister Nawaz Sharif had directed the then ministry of water and power to initiate a probe and fix responsibility on officials, including those associated with the PPIB, for the change in status of Fatima Energy from a captive power plant to an independent power producer (IPP).

Under the co-generation policy of the government, Fatima Energy was incorporated as a special purpose vehicle. It was originally set up by Fatima Sugar Mills as a captive power plant for energy supply to bulk consumers.

Later, Fatima Energy applied for switching status from the captive power plant to an IPP. The company was then registered as an IPP with the PPIB for setting up a 118.8-megawatt co-generation (bagasse and imported coal-based) plant.

After registration, Fatima Energy filed a tariff petition and the National Electric Power Regulatory Authority (Nepra) announced a levelised tariff of Rs7.83 per unit on take-and-pay basis.

The PPIB, in its meeting on February 15, 2017, agreed on the issuance of the Letter of Support to Fatima Energy co-generation power project.

It suggested that after negotiations an implementation agreement should be submitted to the PPIB and in case of increase in financial obligations of the government, approval of the Economic Coordination Committee (ECC) may also be sought.



Consequently, a project-specific implementation agreement and power purchase agreement were finalised after talks with Fatima Energy by the PPIB and CPPA-G respectively on take-and-pay basis.

The PPIB also noted that government’s obligations had not increased following the agreements.

The matter was taken up with an inter-ministerial committee on June 5 last year which recommended that approval of the Cabinet Committee on Energy should be sought to add 118.8MW to the national grid immediately.

However according to an official, the conversion of a captive power plant to an IPP is against the law as these are two completely different types of projects developed under different policies.

Published in The Express Tribune, May 25^th, 2018.

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