Govt grants HSD test waiver to power plant
The government has decided to charge a uniform tax on the import of petrol and high-speed diesel. PHOTO: FILE
The federal government has granted a four-month high-speed diesel (HSD) test waiver to the Punjab Thermal Power (Pvt) Limited, Jhang for its 1,263-megawatt re-gasified liquefied natural gas (RLNG)-based combined cycle power plant.
According to sources, the power plant had suffered “abnormality” in its part that was related to diesel fuel distribution, prompting the company to request the government for delaying the initial capacity test and heat rate test.
The initial capacity test and heat rate test of HSD is envisaged under Section 8.3 of the power purchase agreement, which should be conducted before the declaration of commercial operation date (COD).
The Punjab Thermal Power made the request because the plant was not ready for the requisite commissioning tests owing to abnormality in a part related to the diesel fuel distribution. Taking up the matter, the Power Division briefed the Economic Coordination Committee (ECC) in a recent meeting that the Punjab Thermal Power (Private) Limited had constructed a 1,263MW RLNG-based combined cycle power plant in Jhang, Punjab.
The company requested that subject to the successful completion of RLNG commissioning tests of the power plant, the COD on RLNG be declared in order to allow efficient electricity generation during the summer months of 2023 and to save the company and government of Punjab from financial burden.
The Power Division told the ECC that under the terms of the power purchase agreement, the COD was June 23, 2023 and the company was required to complete both RLNG and HSD commissioning tests before that. The request for deferring the HSD test would enable the company to achieve COD within the stipulated timelines and would allow it to claim the capacity purchase price component of the tariff.
For the purpose, the Punjab Thermal Power relied on Clause 19.4 of the power purchase agreement, which allowed waiver or the discharge of performance or compliance with any provision of the agreement.
It was stated that the RLNG power plant had a high efficiency (61.16%) as compared to other RLNG plants in the country, therefore, after the start of its operation there would be efficiency gains. It would lead to efficient electricity generation during the peak summer months.
The Energy Department of the government of Punjab, which is a shareholder in the project, also wrote a letter to the Power Division secretary, requesting him to take up the matter with the Central Power Purchasing Agency-Guarantee (CPPA-G).
It called for resolving the issue by accepting the request for the deferral of final performance test on HSD for eight weeks to ensure the earliest declaration of COD.
It would allow the declaration of COD upon successful completion of RLNG commissioning tests without any HSD test. Till the successful HSD testing, the unavailability of RLNG would be treated as forced outage under the power purchase agreement. As this situation was not covered in the agreement, the ECC’s approval was sought.
After due deliberations and thorough evaluation, the case was presented to the CPPA-G board of directors on June 19, 2023. The board authorised the CPPA-G management to submit a summary to the Power Division to seek ECC’s approval.
The ECC considered the summary submitted by the Power Division and approved the proposal with the directive that the exemption would be for four months only.
Published in The Express Tribune, August 3rd, 2023.
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