ISLAMABAD: Amid opposition by the Sindh government on legal and constitutional grounds, the National Electric Power Regulatory Authority (Nepra) on Tuesday reserved its judgement whether or not to grant generation licence to a 1,180-megawatt, LNG-based power plant in Punjab’s Bhikki area.

The regulator was hearing comments of the stakeholders on a request filed by Quaid-e-Azam Thermal Power (Pvt) Limited for grant of generation licence for the project located in Bhikki, Sheikhupura district. The hearing was presided over by Nepra Chairman Tariq Sadozai.

Tariq Ali Shah, a focal person of the Sindh government, said the setting up of LNG-based power plants in Punjab should not be allowed without a formal approval of the Council of Common Interests (CCI), which he said was the constitutional forum to settle inter-provincial issues.

The Sindh government believed the natural gas, electricity and all related incidental or ancillary matters appeared at the entry number 2, 4 and 18 of the second part of the fourth schedule of the Constitution and fell in the provincial domain, and hence should be taken up for approval with the CCI.

Mr Shah said LNG power plants in Punjab should not be set up solely on the basis of decisions of the cabinet’s Economic Coordination Committee (ECC) and its energy committee because they had no legal standing on the issue in the eyes of the Constitution. “This project should be presented before CCI for approval and should not be initiated unless cleared.”

He said the regulator would have to consider Sindh government’s viewpoint and Punjab should not be granted generation licence to operate the plant. Sindh has already submitted before Nepra in writing that the regasified LNG (RLNG) after import would be swapped with natural gas from Zamzama, Dadu, Kandanwari and Sawan fields and Sindh’s consent was necessary for such a swap.

Quaid-e-Azam Thermal Power’s CEO Ahad Khan Cheema informed Nepra that a gas sales-purchase agreement (SPA) with the Sui Northern Gas Pipeline Limited (SNGPL) would be signed on Wednesday (today). He said the project had been approved at the highest level and contract for its installation had also been awarded through competitive bidding.

He said the SNGPL and Sui Southern Gas Company (SSGC) were also expected to sign SPA for swapping RLNG with domestic gas near Sawan field, while better quality imported LNG would be made available for consumption in Sindh.

He said the two gas companies were also working on projects for increasing their pipeline capacity by 800mmcfd (million cubic feet per day) from 400mmcfd to support LNG-based power stations in Punjab, where various consumers were facing extreme energy shortages.

Responding to a question from Nepra’s chairman, Mr Cheema said his company was not the first to contract new power plants of General Electric (GE). He said the GE had contracted 10 similar orders, latest being in France where these plants were running successfully.

Rejected viewpoint of the Sindh government, he said LNG-based power plants did not require approval of the CCI and these plants were being set up under the power policy of the government of Pakistan and all relevant approvals were in place. He said a number of issues raised by Nepra case officers were out of the regulator’s jurisdiction.

Mr Sadozai commented that anyone could come to the regulator for generation licence which had to take into account views and concerns of all the stakeholders and also frame its own issues before granting a licence. He said it was important for the regulator to satisfy all questions and issues raised by any side.

The Nepra staff wondered if the project was justified given the fact that a number of imported and local coal-based projects were being set up in the south of the country while their generation was supposed to be consumed in the centre and north of the country.

It also pointed out that currently there was no dedicated transmission line in the country to deliver RLNG into the project site, and LNG import agreements and arrangements were still not in place.

Meanwhile, the regulator also conducted public hearing regarding new tariff for Quetta Electric Supply Company (Qesco) for 2015-16.

The Qesco chief said during the hearing that the company was supplying power to the far-flung areas of the province.

It was a challenge for company to control losses due to big distribution network, he said, and pleaded the regulator to approve higher tariff for 2015-16.

The Nepra chairman said the company should control its losses and should use budget allocated by the federal government effectively.

He expressed concern when the Qesco said the company was transferring all its revenue collections to the Central Power Purchasing Agency (CPPA) of the federal government and had little financial space to reduce losses as the system required investment.

The regulator was informed that this fiscal transfer was taking place without any written orders of the federal government. Mr Sadozai said the company should improve its affairs before making payment to the CPPA.

Published in Dawn, February 10th, 2016