Delays in linking new power plants to grid offset tariff advantages

LAHORE: The government has been falling flat for nearly two years to accelerate linking of newly-built power plants with the grid, turning away tariff advantage of growing electricity generation from consumers.

Till date, the National Transmission and Despatch Company (NTDC) could not accept financial bid for Asian Development Bank- (ADB) funded interconnecting 660kV Matiari-Lahore HVDC transmission line with load centre of Lahore and surrounding areas. The project’s tender was floated in December 2018. This process should have been completed in six months as per the norms involving international financial institutions.

Resultantly, the work on “procurement of plant-design, supply, installation, testing and commissioning of “500/220/132 kV Lahore north substation and extension works at 500/220/132 kV Gakkhar substation” could not be initiated within the stipulated time. Had NTDC awarded the project within six month or so after the tender, the construction of substation and interlinking of transmission line could have been completed substantially.

When contacted NTDC spokesman said contract award process has not been concluded. Procurement for the project has been carried out in accordance with rules.

Out of ten bidders, only three were technically qualified whose financial bids were opened from which two bidders’ (French and Chinese) prices were equivalent, while, third one was 40 percent higher. Owing to inordinate delay and inaction on the part of NTDC, both the lowest and second lowest bidders have been backed out due to alleged mishandling of affairs and rising cost of inputs

If NTDC management succeeded in timely engaging one of these bidders in initiating work on war-footing basis in time-bound manner as per the ADB advice, far reaching negative impact of not connecting 660kV Matiari-Lahore HVDC transmission line with Lahore and surrounding areas could still have been avoided.

Sources said the NTDC procurement committee approved the award of contract to a Chinese company while ADB termed French company winner on technical grounds relating to financial bids. However, NTDC management and ADB lingered on the evaluation process on one reason or another.

The failure of establishing this crucial linking of high voltage transmission line with distribution network connecting one of the biggest load centers within prescribed date would result in penalties of billions of rupees on monthly basis.

Such unbearable financial pressure would be borne by NTDC as 700MW wind power project, 660MW Lucky power plant and Jamshoro Unit 660MW are scheduled to start generation during September-December. Moreover, nuclear power plant (Kanup-II and Kanup-III) having 1,100MW each capacity are on course to come online as per schedule and NTDC will not be able to do its core work of connecting these power plants with load centres.

The project is designed to receive power from south of country through 660kV Matiari-Lahore HVDC line and serve the biggest load center of the country. If the project is not completed within the anticipated timeline which is now a potential dreadful reality, it will result in heavy liquidated damages to NTDC, as the HVDC line will be operated on build-own-operate-transfer basis by with sovereign guarantee of government.

The cost of such colossal incompetence will ultimately be braved by the consumers under the pass-through mechanism, setting off unbearable embarrassment for the incumbent government. The fallout of delay in NTDC interconnection subsequent lack of power evacuation from several power plant would be colossal, having cascading effect.