CPPA chides NTDC for Rs16bn power sector loss

LAHORE: The Central Power Purchasing Agency (CPPA) has reprimanded the National Transmission and Despatch Company (NTDC) for causing a loss of Rs15.705 billion to the power sector on account of disallowed fuel cost against the economic merit (EM) order deviation.

The agency has also expressed grave concerns over the non-responsive behaviour of the company by not responding to the queries/observations raised by the National Electric Power Regulatory Authority (Nepra) and others in writing repeatedly, Dawn has learnt.

“We are writing you in continuation of our letters (total seven from Nov 18, 2020 to Aug 10) wherein we requested NTDC to take prompt action in respect of the fuel costs disallowed by Nepra in the power distribution companies (Discos) fuel cost adjustment (FCA) determination due to alleged violation of the EM order,” reads a CPPA letter written to the NTDC managing director on Oct 21. “It is, however, disappointing to note that despite clear and repeated instructions of Nepra through FCA decisions as well as requests from CPPA through a series of correspondence referred above, the NTDC has not been able to explain/justify the authority of the alleged violations,” it deplores.

The CPPA, in the letter, further revealed that meanwhile a staggering amount of Rs14.325bn had already accumulated till July 2021 as a loss to the power sector on this account. And in the FCA determination for September 2021, Nepra has further disallowed another Rs1.381bn raising to Rs15.705bn.

The CPPA also told the NTDC that the power sector is already under the huge burden of circular debt. And therefore, no-action by the NTDC is compounding the issue and compelling the power sector entities to adjust this amount against NTDC’s use of system charges (UoSC) in their books of accounts.

“In the broader interest of the power sector, we again request you to address the observations/queries of the regulator to its satisfaction. Your intervention in the matter would allow CPPA not to adjust the disallowed fuel cost from NTDC’s UoSC payable by Discos,” seeks a letter written by the CPPA’s chief financial officer.

Nepra had also called for an explanation of the company on Oct 13.

On the other hand, the NTDC allegedly continues taking time to respond and ignoring the observations raised by the regulator as well as the CPPA. However, in response to Nepra’s Oct 13 explanation notice, the NTDC in its Nov 11 letter sought two weeks to justify its position.

The NTDC referred the Nepra’s Oct 13 notice whereby an explanation was sought regarding the change in the stance of the NTDC/NPCC on the impact of change in loading position of M/s Lalpir and M/s Pakgen power plants from 20 per cent to 50pc which has allegedly led to the decision with adverse operational and financial implications.

The NTDC complained that the authority granted it 10 days to respond instead of the 10 working days as requested. It also told Nepra that the response of the explanation notice is still under consideration.

“In view of the above facts and circumstances, it is requested that the NTDC may kindly be granted an additional two weeks’ time for submission of reply,” seeks the NTDC letter written by Chief Law Officer (CLO) Ghulam Nabi.

According to an official source, the company seems to have no justification over operation of the furnace-oil run plants, which come in last of the merit order for operation because of generating the most costly electricity. “Why the merit order was violated since there was no need of allowing running of such plants at that time. It means there is something wrong on the part of NTDC and other organisations concerned,” said the official, requesting anonymity, calling for a high-level inquiry to punish responsible for causing this huge national loss.

The NTDC managing director was not available for comments.