Ministry of Energy (Power Division) on Wednesday expressed its inability to ensure required supply of Regasified liquefied Natural Gas (RLNG) – a cheap fuel compared to RFO to the power plants, until new LNG terminals are established.
This stance was clearly communicated by Power Division’s team, led by Additional Secretary, CEO, Central Power Purchasing Agency-Guarantee (CPPA-G) Waseem Mukhtar at a public hearing, held in National Electric Power Regulatory Authority (NEPRA) with respect to proposed increase of Rs2.65 per unit in Discos’ tariff for September 2021 under Fuel Component Adjustment (FCA) mechanism.
CPPA-G, in its petition, had sought positive adjustment of Rs 2.66 per unit in Discos’ tariff for September 2021 with a financial impact of Rs 36.23 billion, but the regulator agreed in principle to allow increase of Rs 2.51 per unit for the month, after adjustment of Paisa 7.17 per unit on account of tariff difference of Fuel Cost Component (FCC), Paisa 7.11 per unit for deviation from EMO and Paisa 0.22 per unit on account of part load factors. The cumulative financial impact of adjustment in EMO and part load factors has been calculated at Rs 1.003 billion.
After adjustment, the net impact of FCA will be Rs2.5137 per unit, while the cumulative financial impact of which has been calculated at Rs34 billion. However, since FCA of Rs1.95 per unit of August 2021 will be replaced with September, the actual positive impact will be over Paisa 56 per unit for the month.
The total financial impact of deviation from EMO was Rs2.075 billion in September 2021, of which Rs 1.103 billion was on account of RLNG shortage, Rs655 million due to system constraints and Rs316.56 million due to underutilization of efficient power plants.
Chairman NEPRA, Tauseef H Farooqi inquired about the reasons for higher use of furnace oil in September. The officials of National Power Control Centre (NPCC) responded that the main reason for use of furnace was increase in demand and outages of some power plants.
Additional Secretary Power Division stated that demand increased by seven per cent in September 2021, adding that there are issues in supply of RLNG to power plants.
Reacting to Additional Secretary, Power Division, Chairman, NEPRA, said that RLNG-fired power plants requirement is 950 MMCFD but SNGPL is providing only 800 MMCFD, adding that the situation indicates that the actual situation has not been taken care of.
Responding to Chairman Nepra’s remarks, Additional Secretary, Power Division who is also acting CEO CPPA-G said that there would be hurdles in supply of RLNG until new RLNG terminals are established.
Taking part in ongoing discussion, Vice Chairman NEPRA, Rafique Ahmad Shaikh remarked that the situation indicates that the consumers would continue to pay capacity payment.
Chairman NEPRA, who is continuously urging the government to operate inexpensive power plants though he is not being taken seriously by the Power Division top brass, maintained that RLNG supply is facing hurdles for the last 8-10 months. He questioned why timely planning was not done with respect to fuel arrangements.
He further queried as to why CPPA-G does not share its projection with those who procure RLNG, adding that it should be established that the order should be placed in favour of whichever fuel is cheaper.
Additional Secretary Power Division stated that Power Division has submitted demand of RLNG for four months i.e., till January 2022 and at same time demand of furnace oil till February 2022.
After hearing the comments of Additional Secretary Power, Chairman NEPRA commented that whatever logic has been given by the Power Division is not the remedy, adding that the regulator will look into it.
The officials of NTDC were also quizzed for not bringing improvement in their system, burden of which is being passed on to the consumers or not being allowed by the regulator. Member KP, Maqsood Anwar Khan also asked a few questions from the officials of attached organisations of Power Division.
According to Vice Chairman NEPRA, an amount of Rs1.23 billion of NTDC was deducted and passed on to the consumers due to constraints. He further argued that steam turbine of one power plant is dysfunctional since 2013, which has not been replaced.