Nepra report says power sector hit by underutilization of efficient plants

Power underutilization

Underutilization of efficient power plants was one of the important causes for the rise in the consumer-end price of electricity, said National Electric Power Regulatory Authority (Nepra) in the “State of Industry Report 2020-21.”

The Nepra report, issued on Thursday said, “The pending new electricity connections, load shedding despite the availability of electric power generation capacity, non-availability of fuel, weak transmission and distribution system, as well as poor governance, were the major contributing factors for lower utilization of efficient power plant.”  

It further said that the electricity system was badly affected during the outgoing fiscal year by underutilization of the highly efficient power plants run by Regasified Liquefied Natural Gas, increase in circular debt, poor governance, and fuel supply changes and all these factors made the consumer burdened.

Read more: NEPRA indicates Rs 2.51 tariff hike on account of fuel cost adjustment

Nepra said that despite constantly conveying its demand for RLNG to concerned departments in time and even before, the required quantity of fuel was not received. As a result, certain RLNG plants remained either unutilized or underutilized. This is reducing their efficiency and increasing their energy purchase price and unutilized capacity is increasing their per unit capacity payment. RLNG is not produced locally therefore, its import could be well managed by proper planning and scheduling.  

The report suggests that a gas supply agreement is required to be signed between the parties with the back-to-back agreement so as to save the consumers from the burden which is put on them due to the non-supply of gas.  

The report says that the intermittent plants enjoy the priority dispatch condition and in case of non-evacuation of available power from these plants, they are entitled to payment on account of non-project missed volume.  

Due to take or pay contracts, the power plants get the capacity payment against their full capacity despite the low utilization factor. The capacity payment to the power generation plants as verified by CPPA-G, was Rs 613.9 billion in the fiscal year 2020-21 which was Rs 611.56 during the previous financial year. The increasing circular debt is a big danger for the economy of the country.

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