Free from bureaucratic, political interference: For lethargic power sector, CPPA made independent
Move to see competitive market structure in place by 2020.
Officials said that the Asian Development Bank (ADB) and other donors had pressed the government to take the step and develop an environment resembling whole-sale markets. PHOTO: AFP
ISLAMABAD:
Following mounting pressure from multilateral donors, the government has decided to make the Central Power Purchasing Agency (CPPA) an independent entity.
This will help keep a check on the piling circular debt and end bureaucratic and political interference, turning the crippled power sector into an effective buyer-and-seller market by 2020 where only clearance and payment of bills would ensure supply of electricity.
The power sector, which is marred with distribution and transmission losses, is also plagued by piling circular debt that sees non-payment issues stemming from end-consumers till the state-owned power distribution companies and independent power producers.
With circular debt issues crippling an already lethargic power distribution network, officials have decided that the CPPA — which had been working under the umbrella of the National Transmission and Dispatch Company (NTDC) – should be separated and made an independent company.
Officials said that the Asian Development Bank (ADB) and other donors had pressed the government to take the step and develop an environment resembling whole-sale markets.
The new CPPA
The CPPA (Guarantee Limited) will be an independent company and shall perform the function of settlement of dues between buyers and sellers.
It is international best practice and imperative to separate the functions and business of settlement and development of competitive power market structure from the generation, transmission and distribution system. The move is a major reform that would achieve efficiency through transparent settlement of power sector dues.
Officials said that the company had been tasked to enter the competitive market operations from July 1, 2020.
Presently, NTDC is the main agency that buys power from producers. However, next year onwards, there would be other buyers, under the CPPA, that could buy electricity. In the last phase, a competitive market would be operational with several buyers and producers combining for the ‘best deal’. Here, the CPPA would play the role of a facilitator.
The Economic Coordination Committee (ECC), in its meeting held on April 30, revised the timeline to make CPPA-G operational. The ECC was informed that within two years of the notification of market rules, the CPPA-G shall prepare a comprehensive plan, in consultation with all stakeholders and approved by the power regulator, for the transition of the power market to a competitive Trading Bilateral Contract Market.
Published in The Express Tribune, May 8th, 2015.
Following mounting pressure from multilateral donors, the government has decided to make the Central Power Purchasing Agency (CPPA) an independent entity.
This will help keep a check on the piling circular debt and end bureaucratic and political interference, turning the crippled power sector into an effective buyer-and-seller market by 2020 where only clearance and payment of bills would ensure supply of electricity.
The power sector, which is marred with distribution and transmission losses, is also plagued by piling circular debt that sees non-payment issues stemming from end-consumers till the state-owned power distribution companies and independent power producers.
With circular debt issues crippling an already lethargic power distribution network, officials have decided that the CPPA — which had been working under the umbrella of the National Transmission and Dispatch Company (NTDC) – should be separated and made an independent company.
Officials said that the Asian Development Bank (ADB) and other donors had pressed the government to take the step and develop an environment resembling whole-sale markets.
The new CPPA
The CPPA (Guarantee Limited) will be an independent company and shall perform the function of settlement of dues between buyers and sellers.
It is international best practice and imperative to separate the functions and business of settlement and development of competitive power market structure from the generation, transmission and distribution system. The move is a major reform that would achieve efficiency through transparent settlement of power sector dues.
Officials said that the company had been tasked to enter the competitive market operations from July 1, 2020.
Presently, NTDC is the main agency that buys power from producers. However, next year onwards, there would be other buyers, under the CPPA, that could buy electricity. In the last phase, a competitive market would be operational with several buyers and producers combining for the ‘best deal’. Here, the CPPA would play the role of a facilitator.
The Economic Coordination Committee (ECC), in its meeting held on April 30, revised the timeline to make CPPA-G operational. The ECC was informed that within two years of the notification of market rules, the CPPA-G shall prepare a comprehensive plan, in consultation with all stakeholders and approved by the power regulator, for the transition of the power market to a competitive Trading Bilateral Contract Market.
Published in The Express Tribune, May 8th, 2015.