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Nepra accuses MOE of shifting Rs30 billion cost to consumers due to inefficient power plants

According to well-informed sources in Nepra, the Ministry of Energy has been accused of passing an “unjustified” financial burden of Rs 30 billion to consumers by failing to provide the necessary RLNG or by operating expensive/inefficient power plants during the past two years.

According to sources, the power regulator has addressed a letter to the Secretary of the Power Division drawing his attention to the two-year supply gap in RLNG for the power sector and the financial damage that has resulted from the operation of expensive power plants.

The Economic Merit Order (EMO) deviations that are made while dispatching power plants are continuously being watched by Nepra.

According to sources, Nepra said in its letter that it had been noted on numerous occasions that certain RLNG power plants were unable to produce electricity to the full extent of their capabilities due to a lack of RLNG supplies. As a result, less meritorious power facilities than RLNG plants that are more expensive and inefficient are used to meet the system demand. This ultimately raises the end-consumer tariff by increasing the generation cost on a monthly basis.

For this reason, NTDC (NPCC) has frequently used RLNG shortage as a primary justification for the operation of its expensive power plants and plants using other fuels. In this regard, NTDC (NPCC) has stated that it informs the pertinent parties of the RLNG requirement for the forthcoming months well in advance to allow for optimal preparation.

However, expensive/inefficient plants are operated to meet the system demand due to a lack of RLNG supply to the power plants.

The lack of RLNG and the subsequent operation of expensive/inefficient power plants have cost an estimated Rs. 30 billion over the last two years, according to Nepra. The Authority views this cost as adding to the burden on energy consumers even if it has been passed on to them through the appropriate FCAs. Thus, a speedy settlement of the problem will be advantageous for the nation as a whole and for electricity users in particular.

The power regulator has advised the Ministry of Energy (Power Division) to work with the Ministry of Energy (Petroleum Division) to ensure RLNG supply to efficient power plants, as per their requirements and as per Economic Merit Order, so that the efficient plants’ capacity is fully utilized and generation through expensive/inefficient power plants is stopped, immediately, in light of the current situation.

Rafique Ahmad Shaikh, a member of NEPRA (Sindh), recently stated in his dissenting notes that it is confirmed from the date of the National Power Control Centre (NPCC) that it is receiving less supply of RLNG in comparison to its demand, which is typically communicated to the relevant quarters several months in advance.

According to him, RLNG being imported fuel can be managed/ ensured through better supply chain management and accordingly impact of such mismanagement into the non-availability of RLNG can not be passed on to the consumers.

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