Costly power generation puts additional burden on consumers, govt

LAHORE: The power generation policy is not being followed in letter and spirit, resulting in under-utilisation of efficient power plants, and financial burden on both the consumers and the government, sources told The News on Monday.

Inefficient management of power affairs not only contributes to financial loss but also results in moderate to massive outages in certain areas of the country, sources said. Power generation plants that had lowest per unit cost were being under-utilised, while the plants with higher per unit cost were given preference in generation during the month of December 2016, they added.

Power utilisation in December 2016 disclosed that Foundation Power, whose power generation costs Rs5.72 per unit, and Guddu 747, having cost of Rs5.70 per unit were among the plants with the lowest per unit cost, but they were among the least utilised thermal plants in December 2016.

Only just about one third of their capacity was utilised at a time these plants were among the most efficient power generation resources available to the national grid, especially in the absence of hydropower plants due to peculiar seasonal variations, sources claimed.

Contrary to this, relatively inefficient power generation plants with a greater cost of production, like Roush, having a Rs7.05 per unit cost, Fauji Kabirwala, whose cost is Rs7.09 per unit, and Kot Addu Block-1, having power generation cost of Rs7.32 per unit, were given preference in power generation with capacity factor of 93 percent, 91 percent, and 91 percent, respectively.

Sources further said Central Block-II which costs Rs6.77 per unit was utilised 84 percent; Attock Gen was utilised 76 percent at a cost of Rs7.24 per unit, while Nishat Power that costs Rs7.74 per unit, and Nishat Chunian Rs7.8 unit were utilised 67 percent and 74 percent, respectively. Sources said the non-implementation of economic order of power generation plants by the National Power Control Centre (NPCC) caused losses of over Rs5 billion to the national exchequer in the month of December 2016 only. It was solely due to not assigning priority to the efficient plants having lower production cost, claimed sources.

As per the procedure, the National Transmission and Despatch Company (NTDC) issues a list of power plants based on their respective cost of production. This merit order is meant to show the preferences of power purchases based on cost of production or efficiency.

The NTDC instructions in December 2016 were clearly against the goal of the National Power Policy 2013, which is to ensure the generation of inexpensive and affordable electricity for domestic, commercial and industrial use on priority basis.

Such an illogical approach, sources said, resulted in huge losses to the national exchequer in the shape of reduction in sales tax collection for not producing and delivering the full available generating capacity.

When contacted, Yunus Dagha, federal secretary water and power, did not respond to queries regarding the prioritisation of costly power generation in the month of December 2016. However, an official of the NTDC admitted to prioritising generation of such inefficient plants, citing technical reasons. There were extreme fog related events in the winter months that caused successive disruption in transmission and distribution network.

In order to avoid burdening on the under-stress power transmission network, we had to split the national grid into two in order to ensure reliability of power supply, an official maintained. That was why we relied heavily on power generation plants that were located close to power centres, he said.