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August 13, 2016
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Nandipur Plant has sustained Rs12.3 billion loss till now

National

August 13, 2016

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ISLAMABAD: The Ministry of Water and Power (MoWP) has conceded that Nandipur Power Plant has sustained a loss of Rs12.3 billion till now as Nepra has disallowed over Rs20 billion cost in tariff, resultant the top management of the project is unable to pay back the loans it borrowed for the project.Since its commissioning of date (CoD) until now, the project braved the loss of Rs12.3 billion in the wake of refusal by Nepra in allowing over Rs 20 billion as increase in cost of the project in tariff. The total cost of the project stands at Rs58 billion, out of which Rs53 billion has been spent.

The remaining amount will be spent on the gas conversion of the project by February 2017. This has, virtually, made us unable to pay the loans of Rs34 billion borrowed for the project, said Joint Secretary (Power) Zargham Eshaq Khan.

At prevalent, the  tariff of Rs11.6361 per unit for 30 years, the project will continue to prone to get economically collapsed as regulator has not provided the required solace enough to continue to make the project operational. This has been included in the new review petition submitted with Nepra.

The EPC cost not being allowed in the tariff will automatically park in the system as uncovered amount meaning by that it will add to the circular debt. The loss of Rs12.3 billion the project sustained will appear in the circular debt, Mr Khan argued. “So far the power regulator has denied including the interest during cost (IDC) that hovers at Rs14.5 billion till the completion of the project as per the revised date,” he said.

The project was to come on stream in April 2011, but it has got abnormally delayed in last PPP era, owing to which, he interest during construction on the loans arranged for the project has increased as well as the overrun cost has also been increased.

The management of the project is seeking the permission of IDC beyond the 36 month time. But Nepra is not willing to provide the IDC as demanded by the government. “We want Nepra should extend the EoI (extension of time) to the project as reasons for delay of the project are justified.”

Not contented with new tariff at Rs11.6361 per unit on Furnace oil of the Nandipur Power Plant that Nepra announced on January 27, 2016, the government wants more increase in power tariff of the project, and to this effect, it submitted another review petition with the regulator seeking the inclusion in the tariff the impact of amount of Rs14.5 billion as interest during construction (IDC). “And to this effect, a new review petition has been submitted with Nepra.”

Mr Khan said the regulator has not accommodated the project’s management in extending the pre-CoD tariff as prior to commissioning of date, the plant was run on diesel and electricity was injected in the system.

During pre-CoD operation of the power plant, the project management is not given any tariff owing to which, the project experienced the loss of Rs4.6 billion just under the head of pre-CoD operation. In addition, whenever the project gets started, it is run on diesel, and when it produces 22MW of electricity, it is shifted on to RFO (residual furnace oil).

The Nandipur Power Plant is being given differential treatment not the uniform treatment by Nepra as regulator has extended the pre-CoD tariff to every power plant, and IDC till the completion of the project, but when it comes to Nandipur, Nepra does not seem to provide the treatment that is extended to other power projects. So much so, no open cycle tariff has been allowed to the Nandipur Plant which was extended to Kapco (Kot Addu Power Plant) and other projects.

Another relevant officer in the ministry told The News, if Nepra increases tariff more by Rs1.5 per unit for the Nandipur Power Project, the project will become sustainable. The existing tariff of the project has been given by Nepra stands at Rs11.6 per unit.

He further said: “We have also asked for more tariff under the head of operation and maintenance (O&M) up to Rs0.52 per unit from earlier Rs0.43 per unit as it is quite difficult to outsource the O&M to any company within the tariff of Rs0.43 per unit.

“We have held the bidding of interested parties for outsourcing the O&M of the project for two times and now in latest bidding, six parties participated. The evaluation process is under way. However, the General Electrci Company has participated in the bidding process with more than the tariff of Rs0.43 per unit. This is why, the government has asked Nepra in the latest petition for increase in O&M tariff by 09 paisas per unit from 43 paisas to 52 paisas."

 

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