ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) is reportedly frustrated with the Central Power Purchasing Agency Limited (CPGCL) for concealing information regarding the “gifted” Gas Booster Compressor Station (GBCS) and undermining the Authority’s authority.
Sources within NEPRA informed NewzShewz that Registrar Waseem Anwar Bhinder has formally communicated the Authority’s concerns to the Power Division, which oversees Gencos.
In detail, the Northern Power Generation Company Limited (NPGCL) filed a petition on October 16, 2020, seeking a modification of the reference tariff for the Nandipur Power Plant. NPGCL requested approval for the gas conversion cost of Rs. 5,427.6 million, significantly higher than the assessed amount of Rs. 2,089.9 million. Among the gas conversion costs was the expense for the GBCS.
The determination issued on April 11, 2022, elaborated on the matter:
“9.11. The third item of gas conversion cost relates to the gas booster, priced at Rs. 1,242 million. This compressor was transferred from GENCO-II (CPGCL), which received it free of charge from Engro Fertilizer in exchange for a 60 MMCFD gas quota from May 15, 2015, to March 31, 2016. The fair value was estimated at Rs. 1,470 million, reduced by 10% and depreciation of Rs. 46.308 million, resulting in an agreed book value of Rs. 1,276.782 million. After a further nine months of depreciation amounting to Rs. 34.731 million, a credit note of Rs. 1,242.052 million was issued by NPGCL to CPGCL.”
“9.12. When determining the tariff for the 747 MW Guddu Power Plant, the Authority allowed a cost of Rs. 1.465 billion for the gas booster compressor station. CPGCL did not disclose during the tariff determination proceedings that it had acquired the gas booster station free of charge from Engro Fertilizer and transferred it to GENCO-III for Rs. 1.242 billion. Had this information been disclosed, the cost attributed to CPGCL’s booster station would have been adjusted accordingly. The Authority has since decided to treat the transfer of the gas booster station at zero value, directing NPGCL to cancel the credit note or issue a debit note for the equivalent amount.”
In light of these developments, NEPRA decided on September 30, 2022, to form an Investigation Committee (IC) under Section 27A of the NEPRA Act. Following the IC’s investigation and comprehensive report, NEPRA issued a Show Cause Notice to CPGCL on July 18, 2023. CPGCL responded on September 5, 2023, and was given the opportunity to present its case during a hearing on November 27, 2023.
During the hearing, NEPRA directed CPGCL to resolve its accounts with NPGCL. A follow-up letter was sent on December 27, 2023, with a reminder on March 4, 2024, instructing CPGCL to comply and submit a report promptly.
In response, CPGCL stated on May 9, 2024, that the matter was referred to its Board of Directors for approval regarding the settlement of accounts at zero rate instead of the net book value of Rs. 1,242,051,646. However, the Board resolved on May 7, 2024, to challenge NEPRA’s decision by filing a petition with the NEPRA Appellate Tribunal.
According to sources, NEPRA is seriously concerned about CPGCL’s actions, including its failure to follow regulatory directives and the decision to contest NEPRA’s instructions rather than comply. NEPRA Registrar stated, “CPGCL’s conduct is troubling, as it delays resolution and risks setting a negative precedent for regulatory compliance.”
NEPRA has requested the Power Division’s intervention to ensure CPGCL adheres to the regulatory framework and resolves this issue promptly. A review of CPGCL’s Board decisions may also be necessary to ensure compliance with regulatory standards.
NEPRA has emphasized that swift resolution of this matter is crucial for maintaining the credibility and effectiveness of the regulatory framework in the energy sector.
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