LOAD SHEDDING --- RENTAL POWER PLANTS

The power demand is about 14,680 MW and current supply is 10,200 MW i.e. short fall of
4,480 MW providing fertile grounds for social and economic chaos. PEPCO installed
capacity is:
ACTUAL GENERATION CAPACITY PRESENT AVAILABLE GENERATION
Hydel 6500 MW 6400 MW
Thermal 6200 MW 2000 MV
IPPs 6250 MW 4500 - 500 MW (1500 MW Short Fall
due to circular debt)
RPPs 2250 MW (1100-1200 MW
is to be commissioned in a
period of six months)
Contracts for RPPs were signed in 2008-2009 (Six months maximum period and
extensions are been granted without any penalty which is indirect benefit to suppliers.
A brand new car would cost 10 lacs but after use for ten years its depreciated cost would
be about 1 lac conversely on payment invoices the cost has been as Rs. 10 lacs but the
actual payment is Rs. 1 lac Thus actual saving is about 9 lacs This is an example to show
that in case of RPPs who are mostly 10 - 15 years old payment has been shown in
invoices for the new ones but the actual payment is far less as per table shown attached.
where is the money difference between new and old payment invoices has gone which is
in billions as also contended by Faisal Saleh Hayat in a Munazra on ARY where he was
holding in his hand a Holy scripture and saying these facts on but when he asked the
Minister Water and Power to hold the scripture in his hand and refute all these facts.
Since it became a disputed matter there was no alternative left for the Prime Minister to
refer it to the third party that was selected as Asian Development Bank.
The objections and salient features of ADB and reply by WAPDA as under

OBJECTIONS BY ADB REPLY BY GOP / PEPCO

1. No transparency in the selection of 1. Incorrect. All RPPs have been

RPPs. selected on the basis of
International Competitive Bidding
process (ICB)

2. Government is not fully utilizing the 2. Incorrect. IPPs already are on the
IPPs and captive power potential, optimum capacity. Captive power
hence no justification for RPPs. story is misreported

3. Government is wasting huge 3. No GOP money is involved in RPPs.

financial resources in RPPs 14% GOP is only paying rental price of
advances to the RPPs. the service and 14% in advance
shall be adjusted against mutually
agreed rent.

4. RPPs more expensive than the new
IPPs and much more expensive
than the existing IPPs.
4. RPPs are comparatively expensive
than IPPs average price, mainly
because IPPs utilize latest
technology have greater efficiency
due to combined cycle plants.
Contrarily, RPPs are simple cycle
and refurbished / second hand
plants meant for quick delivery.
RPPs life span is 3-5 years
compared with the IPPs 25 years
life cycle.
5. Government would not be able to
pay the subsidies on account of
heavy tariffs of RPPs, hence circular
debt would reemerge.
5. In view of the GOP's initiative in
hydropower generation, refurbishing
GENCOs and emphasis on wind coal
and renewable technology - combined
with tariff rationalization measures - the
likelihood of circular debt reemerging is
remote.

The above replies are fabricated, vage and inconclusive; probably the GFR (Government
Financial Rules) have not been consulted.

1. As regard transparency Karkey (turkey) 231-MW for Karachi and Walters 205-MW for
Karachi have been purchased at the cost of USD-564.64 millions and USD-325.89
millions the cost per unit in case of Karkey would be Rs. 13.61 per unit and in case of
Walters it will be Rs. 16.93 per unit. For Satyana road Faisalabad RPP is 200-MW
purchased USD-111.15 millions which means the Karachi plants are times more costly
that is almost 300%. So where is the transparency?

2. As regard captive plants that is Sugar, Cement, Textile, Fertilizers etc surplus power of
about 4000 - 5000 MW is easily available which has been recently negotiated by the
Prime Minister with the help of Chief Ministers in the recent energy meeting held in
Islamabad. Thus no misreporting rather the reply is a skullduggery and is a staple of
fiction.

3. If no GOP money is involved in purchase of RPPs then who is financing it, I would
advise to consult GFR where every penny recovered from the public in the shape of tax
or electricity bills its a GOP liability and thus GOP money. This is a misleading statement,
would the supporters of RPPs would pay from their own pocket.

4. This point has already explained in Para 1 and sufficient to open the eyes of RPP
supporters. As regard payment of 7% to 14% no amendment has been made in the
contract agreement and the economic experts and engineers feel that by allowing 14%
advance payment to the RPP suppliers is undue favor not in under the law. It means that
the suppliers of RPPs had already recovered their cost. Moreover the agreements were
signed in 2008-09 and the delivery / commissioning period was 6 months to 1 year;
where is that? Undue extensions allowed which is undue favor to RPPs suppliers and
increasing the misery and agony of public and industry which is substantial, social and
economic decline of the country.

It is considered that the existing system has an unutilized capacity of 2000 – 3000 MW,
which is not available on account of nonpayment to IPPs and inefficiency on the part of
GENCOs. Consequently, RPPs are not needed at all.

In para 4 of the objection raised by ADB, GOP/PEPCO’s reply is very pertinent from
transparency and audit point of view:
“RPPs are comparatively expensive than IPPs average price, mainly because
IPPs utilize latest technology have greater efficiency due to combined cycle
plants. Contrarily, RPPs are simple cycle and refurbished / second hand plants
meant for quick delivery. RPPs life span is 3-5 years compared with the IPPs 25
years life cycle.”
Audit – General has already carried out a detailed check of over – invoicing about
HUBCO/IPPs and following charges were worked out.

IPPs 6 cents
Capacity 4 cents
Energy 2 cents
RPPs 18 cents (Worked out by PEPCO)
Capacity payment 10 - 11 cents
Energy payment 07 cents.

It can safely be assume that there is over – invoicing of 238% in case of RPPs and
therefore in this particular case sage opinion og the Audit - General of Pakistan may also
be obtained.

CIRCULAR DEBT, LOAD SHEDDING, ECONMIC CRISES, UNEMPLOYEMENT AND

AGONY OF THE PUBLIC

Up to 2001 WAPDA generation position was as under

Hydel 40%
Thermal 40%
IPPs 20%

Generation cost of WAPDA Rs. 3.4 - 4.0 per unit

Selling cost to consumer Rs. 4.0 - 4.5 per unit
Profit Rs. 0.5 - 1.0 per unit
I.e. 52 Billions unit per anum (52billions x 1.0 =
Rs. 52.00Billions per anum)

PEPCO Performance

Hydel 30%
Thermal 10%
IPPs 60%

Generation cost is Rs. 9.19 per unit

Selling cost to consumer Rs 5.78 per unit
Loss Rs. 3.14 per unit
i.e. 52 Billions unit per anum (52billions x 3.14 =
Rs. 177billions loss per anum)

THEFT / LINE LOSSES

WAPDA 25%
KESC 40%

IMF / GOP / NEPRA had already increased the tariff by 64% in a period of 1.5 years
starting from 2009-10 and that is about Rs. 6.8 per unit and they are stressing the GOP
to increase the tariff by 6% by getting the next trench of 1.5billions

The plea of PEPCO that FATA Government departments and Baluchistan, they are not in
the position to recover the bill from the consumers. This is not new episode for PEPCO
but this id been done for the last so many years during WAPDA period and it as a regular
feature.

Despite WPADA shares of millions of rupees conversion into equity and injection of
million of rupees every now and then the circular debt is almost 150 billion. PEPCO can
not make payments to IPPs / PSO, hence full capacity of generation of IPPs and
WAPDA's own thermal plants it is not in a position to fill in the gap between supply and
demand. High generation cost of PEPCO is because of getting costly powers from IPPs
which is about 60%. The cost of per unit of PEPCO is in the range of Rs. 9 - 10 and until
and unless the generation cost is reduced PEPCO can not be a profitable organization
and give relief / respite to the public in high cost of tariff and lengthy load shedding.

SOLUTION

There are_____ of idle old power stations in the country that is Rawalpindi, Shahdra,
Faisalabad, Multan (MESCO) and MGPS Piran Ghaib, Sakhhar, Kotri, Gudu, Jam Shoro,
Skh. Maanda (Queta) where WAPDA can install 250-MW_____ 4 units Gas turbine
according to the load of the city. This can be precured and installed at these sites in a
period of 6 months to 1 year and almost all the staff and infra structure is already
available. This will add 7000-8000 MW in the system and the cost of gas turbine is almost
Rs. 2 -3 Billion. This expenditure can be met out of a new USD125million USAID energy
programme will upgrade five major power stations and replace more than 11,000 tube
wells producing water for agriculture, while boosting Pakistan's overall power production
by 10%. In the mean time as already negotiated by Prime Minister with the help of Chief
Minister in energy conference 4000-5000 MW may be purchased from Sugar mills,
cement industry, textile industry and fertilizers, which will give respite to the public and
will be less costly than the RPPs.
Capacitors may be installed at almost all the 132KV / 66KV grid stations supplying power
to the consumers. This will improve the power factor from 0.8 to 1.0 resulting in saving of
400-MW

Whenever there is dribbling rain and even light storm 100 of feeders goes off. Why?
Because no renovation and augmentation has been done in any company although
millions of rupees have been allocated in this head. the power infra structure should be
upgraded with a modern efficient grid without such investment there will be no chance of
improvement even if major generation facilities are built. The PEPCO owned power
generation and distribution companies should be technologically and refurbished thus
exercising about 1000-1500MW.

Unfortunately the top management has never worked in the power stations, grid, and
system protection and even in distribution. And a CV or track record of PEPCO's
management would show their capabilities because you will find them on the TV talks,
offices and during field and under construction power plants inspections otherwise
wearing costly suits ties etc. looking "Baboos" instead of Engr. I have seen myself in my
tenure as Dir. finance WAPDA that Saeed Akhtar Niazi, MM Chandio, A Rasheed Kakar
in "Daangrees" day and night to remove the faults. I would suggest a think tank of MS.
Saeed Akhtar Niazi (ex-Member Power0, Tanzeem Huasin Naqvi (Ex- member power)
and Mr. Abdul Rasheed Kakar (Ex-MD Transmission and generation) Skh. Miraj Ahmed
(Ex- MD. expert and distribution) and of course Maxwell Donaldson (Ex0-GM
Protection).and this management may be asked to get guidance from them as they are
not real assets but are very honest officers.