Implementation of indicative generation capacity plan put on hold

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has strongly reacted to a long-term official plan — the Indicative Generation Capacity Expansion Plan (IGCEP) 2020-47 — and has put on hold its implementation due to serious shortcomings.

The IGCEP is a policy document prepared by the National Transmission and Dispatch Company (NTDC) of the federal government under which the future generation capacity expansion should take place in various fuel and technology categories on least cost basis.

Among other major deficiencies, the plan had proposed the 4,500MW capacity induction from $14 billion Diamer-Bhasha Dam after 2043 even though the project is targeted for completion by the government in 2027-28 with public sector investment.

In a rather unusual move, Nepra has told the federal government and all its five major entities, including the NTDC, even before completing the consultative process that the long-term energy plan in its present form could not be implemented. In a letter to all the government entities concerned, Nepra has reported that it had carried out a preliminary review of the plan and “is of the considered opinion that the submitted version of the IGCEP will require a significant improvement to make it an acceptable document”.

Nepra says the IGCEP 2020-47 will require a significant improvement to make it an acceptable document

“This is just one example, which is not plausible. However, there seem to be many other obvious cases similar to this, which require explanation and probable correction,” Nepra said.

The IGCEP 2020-47 was submitted to Nepra for approval by the NTDC on April 20, 2020. The regulator said that as part of the regulatory approval process it has already placed the submitted plan in public domain for seeking comments of the stakeholders and will be holding a public hearing in due course of time to arrive at an informed decision in the matter.

However, it had observed at various relevant forums where stakeholders had highlighted that a number of ongoing as well as future power projects were facing delay for want of approval of the IGCEP. Moreover, the submission of the plan is a requirement under the Grid Code of NTDC, which is an applicable document here and its terms and conditions are binding for the Transmission Licence of December 31, 2002 granted to the NTDC.

The regulator reminded that under Section-35 of the Nepra Act and the related Grid Code, approved in 2005, the NTDC was required to submit each year on or before April 15 for the next financial year, and a 10-year IGCEP identifying the new requirements by capacity with specific technology, location and even projected commissioning dates.

However, the NTDC acted to comply with this critical obligation after a lapse of over 14 years, when it submitted the very first IGCEP 2018-40 in February 2019. The review of the said plan revealed obvious errors in terms of not meeting the expectations of stakeholders. Therefore, Nepra had to return that plan to the NTDC in November 2019 with its detailed comments and instructions to incorporate the input received from various stakeholders especially that of the provinces.

The revised document was submitted on April 20, 2020 by the NTDC. The regulator has already started the consultative process by seeking comments from stakeholders, including the provinces, experts and the general public. “In this respect, the Authority is appalled once again on receiving serious concerns and reservations from various stakeholders, especially from the provinces that their proposed projects either have been ignored completely or have been considered very late in making these practically unviable for any future consideration,” the regulator said.

Therefore, the regulator held that until and unless the IGCEP is approved it should be considered as business as usual and no Letter of Interest, Letter of Support and notification of tariffs should be held up owing to its approval as an ongoing process, where “perfection is more critical than doing it in haste”.

The regulator made it clear that the entire power industry of the country could “not be held hostage due to the delay in preparation of an acceptable IGCEP by the NTDC and its subsequent approval by Nepra”.