Setting a benchmark: Govt to penalise gas-run power plants for inefficiency

Audit of independent and captive power producers begins.

ISLAMABAD:

The government has initiated an energy audit of independent power producers and captive power plants operating on gas that may face higher gas tariff or supply disconnection over failure to meet desired efficiency benchmarks.

Sources told The Express Tribune that the government has set benchmarks for power producers consuming natural gas and operating as independent power plants and captive power plants. The efficiency benchmark has been set at 60 per cent for gas engine and gas turbine based on co-generation technology and 50 per cent for combined cycle plants having capacity of more than 50 megawatts.

According to guidelines given to gas utilities – Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC), the energy efficiency audit condition will not apply to captive power plants running below the capacity of 500 kilowatts.

Penalties over failure to meet criteria

Sources said those power producers which fail to achieve the desired efficiency benchmarks would be given three months to improve their performance. In case, they are not able to do so in three months, they will be given a grace period of another three months with an option to pay penalty equivalent to the tariff notified by the Oil and Gas Regulatory Authority (Ogra) or face disconnection.

The amount received by gas companies as penalty may be treated as operating income. In case of failure in achieving the desired benchmarks after six months, gas supply will be disconnected.

Audit guidelines

In the audit exercise, the auditors will analyse natural gas consumption and bills in relation to the number of energy equipment, according to sources.

They will examine energy equipment for their performance, energy efficiency and improvement as well as deterioration.

They will also analyse and evaluate waste heat utilisation from internal combustion gas engines and gas turbines. Heat recovery equipment is required to meet minimum applicable international standards.

Audit procedure

The gas company will inform power producers in writing seven days in advance about the energy audit. The power producers will nominate responsible and competent staff to accompany the gas company’s auditors during the audit process. Power producers will also provide unrestricted access to their facilities and relevant information.

Generally, efficiency audit of a unit will be conducted annually, but the gas company can conduct the audit at a time other than the schedule.

A senior official of Sui Southern Gas Company (SSGC) said it had set up a technical advisory cell for conducting audit of power producers.

“SSGC has initiated audit of captive power plants in the first stage and so far audit of around 100 plants has been conducted,” the official said, adding notices had been sent to two plants asking them to improve their efficiency to achieve the desired benchmark. “In the second phase, we will conduct audit of IPPs.”

Published in The Express Tribune, December 15^th, 2011.