Kapco moves Nepra for renewal of agreement with new tariff
Business
Kapco moves Nepra for renewal of agreement with new tariff
LAHORE (Dunya Investigation Cell) – After approximately 20 years of squeezing the blood of the people by the Independent Power Producers (IPPs), another five-year agreement has been prepared.
The National Electric Power Regulatory Authority (Nepra) has been requested for a new power purchasing agreement by the Kot Addu Power Plant Company (Kapco) which is backed by most government agencies to generate electricity from the expensive oil.
At present, Kapco has 15 power generation plants, out of which six plants are using Re-Gasified Liquefied Natural Gas (RLNG), six plants are producing power from high speed diesel, while four plants are generating electricity using furnace oil.
The Kapco has requested Nepra to modify the production price of electricity under the new power purchasing agreement.
If the application of Kapco is approved by Nepra, the price per unit of electricity will exceed Rs77.
According to the application, the production cost of electricity from high speed diesel at Kapco is Rs77 per unit while the production cost of RLNG is Rs36 per unit.
The production cost of electricity obtained from furnace oil per unit is Rs30.
It should be noted that currently the power generation capacity of Kapco is 1,600MW, while comparing the use of different types of energy at different times, the power generation capacity from RLNG has touched the record high. Out of which 1,386MW can be generated from RLNG.
Around 1336MW is produced by using high speed diesel and 1087MW is being generated by the use of furnace oil.
The Kapco was established by Wapda in phases from 1985 to 1996, while it is the largest power plant in Pakistan so far as the electricity generation capacity is concerned.
The Kapco 's Power Purchasing Agreement (PPA) with Wapda was valid from June 27, 1996 to 24 October 2022, after which the Kapco submitted an application for a new PPA to Nepra on June 15, 2022.
Under this agreement, the new price of electricity will be applicable from October 25, 2022, while the term of this agreement is till October 24, 2027.
Interestingly, the power generation licence issued by Nepra to Kapco will expire on September 21, 2024.
In the application, the rate of high speed diesel from Kapco is Rs280.75 per litre, RLNG price $12.7148 per mmbtu, furnace oil price Rs111,047.93per tonne, while the price per dollar is proposed to be Rs266.95.
The Kapco applied for renewal of power generation licence for 10 years, however, the Nepra has renewed the licence for only three years.
According to documents submitted by Kapco to Nepra in 2004, the life of 15 energy plants installed at Kapco was 25 years.
The surprising thing is that on one hand, the government is talking about revising the power generation contracts with IPPs, on the other hand, government agencies are seen supporting expensive power generation contracts with IPPs.
These organisations include Pakistan State Oil (PSO), Central Power Purchasing Agency (CPPA), Wapda, Ministry of Planning for Development and Special Initiatives, Multan Electric Power Company (Mapco), National Transmission and Dispatch Company Limited (NTDC) while the Power Division of the Ministry of Energy has been on top.
Regarding the extension of the licence of Kapco, when Nepra sought opinion from the above institutions, all the government bodies seemed to support the renewal of the licence of the company.
Wapda took a stand that the Kapco had paid Rs6.3 million to it since its initiation. Hence the renewal of the licence of the Kapco is fully supported and the licence should be renewed for 10 years.
Similarly, Mapco and NTDC supported the licence renewal of Kapco based on transmission capacity.
Appreciating the ongoing partnership of the Kapco with Sui Northern Gas Pipelines Limited by the Power Division of the Ministry of Energy, any objection was avoided in the renewal of the licence. Pakistan State Oil also reiterated the renewal without raising any objection in the renewal of the licence.
The Ministry of Planning, Development and Special Initiatives was the only government body which objected to the renewal of the licence in the public interest, saying that they would not support the expensive electricity generated from furnace oil.
After the objection of the Ministry of Planning, Development and Special Measures, the Kapco stated that they would prefer to generate electricity from gas instead of furnace oil in future.
