NEPRA approves tariff of 1263MW RLNG/HSD based Power Project

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ISLAMABAD: National Electric Power Regulatory Authority (NEPRA) has approved tariff of above $ 707 million RLNG/HSD based power project of 1,263MW at a time when the country is already facing capacity trap due to surplus electricity in the main system.

Official documents available with Pakistan Today disclose NEPRA’s determination of generation tariff for 1,263.2MW power project on Re-gasified Liquefied Natural Gas (RLNG)/High Speed Diesel (HSD) at Jhang on the tariff petition filed by Punjab Thermal Power (Private) Limited. The determination has been intimated to the federal government for the purpose of notification in the official gazette.

According to documents, the NEPRA has approved Rs 7.1846/kilowatt hours (KWh) level tariff for RLNG and Rs 12.6319/KWh for HSD on combined cycle operation while Rs 9.3042/KWh tariff on simple cycle RLNG.

The authority in exercise of the powers conferred on it under Section 7 (3) (a) read with Section 31 of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, Tariff Standards and Procedure Rules, 1998 and all other powers enabling it in this behalf and after taking into consideration all the submissions made by the parties, issues raised, evidence/record produced during hearings, and all other relevant material, hereby issues this determination, said the documents.

NEPRA has also approved the project cost at $ 707.759 million. EPC cost set at $ 520 million is approved. Items not covered in the EPC contracts scope at $ 5.710 million, non-EPC cost at $ 54.938 million, CAPEX at $ 656.698 million.

It is also learnt that NEPRA’s Member Tariff has submitted his note of dissent. He said this is vague that this project will not add to surplus capacity. He said CPPA-G needs to further substantiate its position.

Raising concerns the project will add to surplus generation capacity in the system, the member said it (PTPL) has not provided any details nor defined the two terms yet given a very categorical conclusion that the project will not add to surplus capacity. He said CPPA-G needs to further substantiate its position.

On the other hand, the ‘Power Balance up to 2025” preliminary report of June 2017, received from National Transmission and Despatch Company (NTDC), points towards a different scenario, where there is a significant visible gap between demand and supply of power generation in the immediate future. However, without going into the details of the report, it is worth pointing out that the government would need to take appropriate remedial measures in retiring some of the old/less efficient public sector GENCOs/IPPs to avoid falling into an excess capacity trap and making avoidable idle capacity payments, thereby addressing the issue of increase in the circular debt.

PTPL filed a tariff petition for approval of the reference generation tariff for Single Cycle and Combined Cycle Operation for the proposed project vide its letter dated September 13, 2017.

NTDC after due consideration of load flow, availability of grid station, transmission lines and in view of the requirements and electricity demand of the area, has allocated to PTPL the site which will be developed by PTPL to serve the project’s land, logistical, water and drainage requirements.

According to the petitioner, the site location is favourable in terms of accessibility and water availability, power evacuation and spurs gas pipeline’s connectivity. From a power evacuation standpoint, the site posts an advantage because CPPA_G and NTDC will not have to add significant transmission infrastructure to the area.

As per the current power evacuation plan, the project will feed net generation to the nearest Toba Tek Singh (TTS) 220KV grid station and proposed dispersal are 220KV in the existing lines. The power will be evacuated from the project through 220KV transmission lines that will connect it to the national grid through grid station.

Further, for the provision of gas supply to the site, a spur pipeline and allied facilities will be constructed at the petitioner’s cost, the same is requested to be entertained in tariff as allowed by the Authority in case of the previous three RLNG projects.

The proposed combined cycle efficiencies are 61.16 per cent and 55.76 per cent on RLNG and HSD respectively and simple cycle efficiency is 39.2 per cent on RLNG. The proposed annual plant availability is 92 per cent. The proposed net capacity after auxiliary consumption is 1242.7MW (Gross 1263.2MW) on RLNG and 1081.8MW (Gross 1105.0MW) on HSD. The petitioner proposed a tariff control period of 30 years.

Punjab Thermal Power (Private) Limited (PTPL) is a wholly owned company of the government of Punjab incorporated under the Companies Act, 2017 to act as an IPP to set up a combined cycle power project of 1,263.20MW (net 1,242.70MW) on Re-gasified Liquefied Natural Gas (RLNG) as the primary fuel and high speed diesel (HSD) as back up fuel located near Haveli Bahadur Shah/Trimmu Barrage, district Jhang. The project was approved by the Cabinet Committee on Energy (CCE) of the federal government on June 6, 2017. CCE also relaxed to the extent of this project, the ban it had placed on new imported fuel-based power projects. PPIB issued the letter of intent for the project on July 26, 2017. PTPL has filed an application for grant of generation license on July 26, 2017, which is under process.

Besides, project financing is to be obtained from various local financial institutions. The mandated lead arrangers and conditions for the finance facilities and in the meantime the costs of the project on debt to equity ratio of 75:25 have been assumed. The finalisation of financing terms is subject to the determination of a viable tariff from NEPRA.

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