ISLAMABAD: The government is actively making efforts to reduce “take or pay” liabilities of Regasified Liquefied Natural Gas (RLNG) on of the lines of capacity payments of private and government owned power plants.
This was disclosed by Chief Executive Officer (CEO), Central Power Purchasing Agency –Guaranteed (CPPA-G), Rihan Akhtar while responding to a question during a public hearing at NEPRA on the FCA adjustment for the month of April 2025 in which CPPA-G has sought positive adjustment of Rs 1.27 per unit, total impact of which been calculated at Rs 12.93 billion. However, after reduction of negative adjustment of Rs 0.90 per unit for three months, total positive FCA would be Rs 0.37 per unit impact of which will be Rs 3.774 billion.
CEO, CPPA-G had been asked as to how the government will deal with surplus expensive RLNG as currently some natural gas fields have shut down and expensive RLNG is being used by the power sector. He replied that the issue of closure of local gas fields has not been mentioned in the CPPA-G FCA adjustment request.
However, the the government is well aware of financial impact of take or pay liability of LNG contracts and in this regard efforts are afoot to reduce take or pay liability on the same pattern that was adopted with regard to capacity payments of IPPs/ GPPs.
The government has diverted few LNG cargoes to the international spot market as demand in the country is limited due to its higher price. Likewise, cargoes have also been rescheduled with Qatar as SNGPL is facing line pack pressure.
With regard to reduction in hydel generation and non-operationalization of 696 MW Neelum Jehulum Hydropower Project, Rihan Akhtar stated that position of hydel generation would have been far different if Kalabagh dam had been constructed.
In reply to a question regarding reservations of Power Minister, Sardar Awais Leghari, about KE’s recent determinations, Chairman NEPRA preferred not to indulge in counter argument and contained himself by stating that “answer is available in Minister’s statement.”
During the hearing, it was noted that CPPA-G had projected 3.23 billion units from hydel in April 2025 but actual generation was 2.31 billion units, which was compensated with generation from RLNG power plants.
“There was no big difference in reference and actual prices of different fuels in April 2025, however, the main variation was witnessed in hydel generation due to which FCA was positive by Rs 1.27 per unit,” said CEO CPPA-G.
However, General Manager, NPCC, the System Operator stated that situation about water availability has improved these days, adding that FCA for May will be at same level of April, if not negative. He also shared reasons for non-availability of K-3 in April, K-2 in May 2025 and Lucky imported coal-fired power plant.
An intervener from Lahore, Aamir Sheikh stated that instead of the promised Rs 7.5/kWh reduction announced by the Prime Minister in April 2025, if Nepra approves the current request of positive adjustment of Rs 1.27/kWh, the net relief the industry will get in April is only Rs 3/ kWh. For instance, if figures of QTA – Rs 1.90/kWh, TDS – Rs 1.71, FCA- Rs 0.90/kWh, FCA March + Rs 0.29/kWh, FCA April +1.27 are taken into account, net relief is Rs 3/ kWh.
“This is in total contradiction of PM’s promised relief package. One big culprit is RLNG. Consumers are being forced to pay for RLNG usage in power bills (cost Rs 24/ kWh) even though local system gas at Rs 12/ kWh is available. Even coal (imported and local) is available cheaper than RLNG and private parties are offering domestic gas at much cheaper than RLNG rate,” he added.
Arif Bilwani, intervener from Karachi criticized the government entities for not taking measures to correct the system’s issues which are hurting the rights of consumers. He also mentioned prolonged closure of NJHPP and Guddu Power Plant. The officials did not have proper answers to his questions and expressed anger.
Bilwani stated that if saving of Rs 12 billion from Negotiation Settlement Agreement (NSA) with Haveli Bahadar Shah had not been made part of Prior Year’s Adjustment (PYA), positive FCA would have been about 2.50 per unit for April 2025.
A team of FPCCI Committee on Energy, headed by Rehan Jawed also raised a number of questions on available data and missing important data to analyse the reasons for higher FCA for April 2025. FPCCI team requested NEPRA not to take any final decision without complete data being available for verification, evaluation and recommendation. Ends
