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Business Recorder
28-05-2025
- Business
- Business Recorder
Nepra clears KE's BERs for two solar, one hybrid projects
ISLAMABAD: National Electric Power Regulatory Authority (NEPRA) has cleared KE's Bid Evaluation Reports (BERs) of two solar - 50 MW and 100 MW power projects - and 220 MW site neutral Hybrid Project at Dhabeji Grid and its Competitive Trading Bilateral Contract Market (CTBCM) integration plan. KEL carried out separate competitive bidding processes for the two solar projects, and in accordance with Regulation 11 of the NCBTR and paragraph 28 of the Decision, submitted the BERs to the Authority on August 28 2024, for the approval of these BERs and the bidding process. KEL stated that upon approval of the BERs, it shall notify the successful bidder and proceed with the subsequent procedural steps. KEL submitted the BERs including therewith all the information as stipulated in Regulation 11(1) of NCBTR. KEL noted that Master Textile Mills Limited ('MTML') emerged as the lowest responsive bidder for both projects, having successfully cleared the technical evaluation and submitted the lowest financial bids. According to KEL's submission, notification to the successful bidder shall be issued upon receipt of the Authority's approval of the BERs. 220MW hybrid project: KE tells Nepra won't seek additional costs The Authority has directed KEL that any adverse financial impact resulting from the delay in execution of generation or transmission projects whether on account of KEL or the successful bidder shall not be passed on to the consumers in any form and this condition shall be appropriately reflected in the relevant project agreements. In view of the foregoing, the Authority was satisfied that the bidding process conducted by KEL complies with the applicable provisions of the NCBTR-2017 as well as the directions issued by the Authority from time to time. Given that the projects were duly optimized in the approved Indicative Generation Capacity Expansion Plan ('IGCEP') and included in the approved Power Acquisition Plan ('PAP'), the Authority approved the BERs submitted by KEL in respect of its 100 MWp Solar PV Project at Bela and 50 MWp Solar PV Project at Winder, Balochistan. This decision was to form the basis for regulatory processing of the tariff petition in accordance with the applicable laws, rules, and regulations. On the issue of 220 MW site neutral hybrid project at Dhabeji Grid the Authority said that it is satisfied that the bidding process conducted by KEL complies with the applicable provisions of the NCBTR-2017 as well as the directions issued by the Authority from time to time. The Authority noted that KEL had initially indicated the possibility of equity participation in the projects, which was approved in the Decision, subject to certain directions. However, upon review of the submitted BERs, it was noted that KEL opted not to participate in the projects, as an equity shareholder. Accordingly, the Authority's directions regarding equity participation do not apply in the present circumstances. It was noted that KEL's submissions regarding the transparency of the bidding process appeared to be well-founded. The timely communication with bidders, publishing the RFP on its website, requiring both hard and soft copy submissions via SAP ARIBA, and uploading all correspondences, clarifications, and amendments on both ARIBA and its website for equal access to information, showed that the bidding process was visible and transparent. Additionally, the Authority noted that no grievance or complaint was filed by any participating bidder during the entire bidding process before the designated GRC, and during the instant proceedings. Furthermore, all documentation, procedural steps, and disclosures required under the NCBTR-2017 were verified, and found to be in order by the Authority. In light of the foregoing, the Authority was satisfied that the competitive bidding process undertaken by KEL was carried out in a transparent manner and was in compliance with the provisions of the NCBTR-2017, as well as the directions issued by the Authority in the decision. KEL stated in the subject BERs dated 19 December 2024 that based on the evaluation criteria, MTML offered the lowest tariff of Rs 11.6508 /kWh (US Cents 4.0363/kwh) for 50MWp Winder project, and Rs 11.2071 /kWh (US Cents 3.8826/kwh) for 100MWp Bela project. KEL was informed that it has duly complied with the directions of the Authority in the approved RFP regarding prudence check and displacement of expensive units. And was asked to submit a revised displacement working reflecting the updated assumptions and parameters. The Authority noted that the revised analysis reflected a more holistic view of the system-level impact of the 150 MW renewable addition. The Authority reviewed those workings and observed that KEL had the responsibility of justifying the benefits of cost savings by procuring energy from these projects, and a sufficiently reasoned and data supported case has been presented to justify the procurement of these projects on the grounds of displacing costlier generation, demonstrating potential savings in energy costs and FOREX outflow through the replacement of expensive generation sources with lower-cost renewable energy. Given that the Projects were duly optimized in the approved Indicative Generation Capacity Expansion Plan (''IGCEP') and included in the approved Power Acquisition Plan ('PAP'), the Authority has approved the BER submitted by KEL in respect of 200 MWp -AC Peak (with a +20% allowance) Site Neutral Hybrid power project at Dhabejl Grid Station. This decision shall form the basis for regulatory processing of the tariff petition in accordance with the applicable laws, rules, and regulations. On integration plan, NEPRA said that keeping in view the material implications of commercial allocation of existing PPM / ERAs, Plan for KE's integration is subject to finalization of commercial allocation of existing PPAs/ EPAs and mechanism for capacity invoicing for supply from National Grid, at the time of commencement of CTBCM, as well as other areas which need to be firmed up as part of CTBCM implementation phase, detailed in the Plan. As detailed in Section 2.2.2 of the Plan, KR's current MYT is for a 7-year tariff control period, expiring on June 30, 2023. As per the CTBCM detailed design and also detailed in plan, ICE shall participate in CTBCM in various service providers as well as market participants. In order to align with the framework which proposes central despatch, KE, as part of the implementation phase shall evaluate appropriate tariff structure, agree on key principles with NEPRA and will accordingly file its tariff petition with NEPRA by July 2022. Copyright Business Recorder, 2025
Business Recorder
08-05-2025
- Business
- Business Recorder
A market in name only
EDITORIAL: The Power Division's latest invitation for stakeholder comments on the long-touted Competitive Trading Bilateral Contract Market (CTBCM) would be laughable, were the state of Pakistan's power sector not so dire. For years, the same reforms have been announced, reannounced, and endlessly recycled through public consultations and draft directives. Now, yet again, the country is being told that competitive electricity trading is just around the corner — with a token 800MW to kick-start liberalisation. The irony is staggering. In a sector drowning in circular debt, inefficiencies, and wilful defaulters, this obsession with process over outcome has become a cruel joke. The National Electricity Plan (NEP) 2023–27 was never going to be a silver bullet. But when some of its key directives, like #87, are being reworded not to enable reform, but to better structure cost recovery for legacy failures, the intent becomes transparent: this isn't liberalisation; it's rearranging the furniture while the house burns. The Power Division's proposed amendment now seeks comments on how to allocate stranded costs — the inevitable fallout of prior bad planning — onto new market participants. This, at a time when the International Monetary Fund is pressing for efficiency in distribution companies, not further bureaucratic entanglements. Why is this model, already discussed to death, being thrown back into public consultation? What more is there to extract from stakeholders who, in many cases, are the very reason the sector is where it is today? The answer lies in a systemic addiction to appearances. These consultations serve primarily to project the illusion of progress, of inclusion, of reform through consensus. But consensus with whom? Several of these 'stakeholders' are themselves serial defaulters, culprits behind the power sector's financial rot, and habitual opponents of reform whenever it threatens their rent-seeking arrangements. The circular debt continues to spiral, now breaching Rs2.4 trillion, while technical losses remain high and recovery ratios pitiful. Despite all the planning documents, task forces, and workshops, the fundamentals refuse to improve. This should prompt a reckoning with the assumptions underpinning the CTBCM itself. Instead, we get redrafted directives and a fresh round of comments — this time with a five-year window for liberalisation and complex caveats for cost recovery, hedging, and hybrid sourcing. Meanwhile, the market stays inert, confidence erodes, and industrial consumers remain hostage to poor governance and predatory pricing. The Power Division's new language emphasises 'balancing financial viability, affordability, and competition.' These are admirable goals, but impossible to achieve in a sector where the price of electricity includes embedded costs for idle capacity contracted under take-or-pay agreements, pilferage, bloated payrolls, and cross-subsidies. Penalising new entrants into the market by saddling them with stranded costs is not liberalization — it's a deterrent. It creates disincentives for investment, distorts price signals, and entrenches the worst aspects of the current system under the guise of reform. The concerns raised by the Korangi Association of Trade and Industry (KATI) are therefore not incidental. They strike at the core contradiction of the CTBCM process: a competitive market cannot function when its rules are retrofitted to protect incumbents. Making new entrants shoulder the costs of past mismanagement — particularly when they had no hand in creating it — undermines the very purpose of transitioning to open access. It's little surprise that the private sector remains wary of participation, and even less surprising that reform fatigue has set in. What's even more worrying is the Power Division's willingness to caveat reforms with broad exemptions, conditionalities, and budget-dependent subsidies that render the new model barely distinguishable from the old. If open access is contingent on fiscal space, third-party consultants, and future frameworks yet to be written, then it is neither open nor accessible. It's policy theatre. Pakistan's power sector does not need more discussions. It needs decisions — backed by enforcement. It needs accountability for the billions in capacity payments, theft, and non-recovery. And it needs a clear break from the model of state-managed dysfunction dressed up as market reform. Until that happens, the CTBCM — however well-packaged — will remain a market in name only. Copyright Business Recorder, 2025
Business Recorder
05-05-2025
- Business
- Business Recorder
Electricity market under CTBCM: Power Div invites comments from stakeholders
ISLAMABAD: The Power Division has invited comments from stakeholders on the country's electricity market under the Competitive Trading Bilateral Contract Market (CTBCM) of National Electricity Plan (NEP) meant to commence with an initial allocation of 800-MW electricity for five years, subject to revision based on market response. In a communication to stakeholders, the Power Division circulated proposed amendments to Strategic Directive #87 of the National Electricity Plan 2023–27. Feedback on these amendments is being solicited by May 18, 2025. According to the Power Division, the proposed changes align with Clause 5.5.2 (g) of the National Electricity Policy, 2021, which mandates the government to make decisions regarding the recovery of costs arising from open access and market liberalisation. The amendments aim to empower the federal government to set up a framework for managing such cost recoveries, particularly in relation to stranded costs. Transmission and CTBCM: IMF asks PD for efficiency boost in Discos The Division notes that market liberalisation and disruptive technological innovations present substantial challenges in recovering the costs of existing generation assets. It emphasises the need for an appropriate mechanism that balances financial viability, affordability, and competition to ensure a sustainable transition for the electricity sector. Power Division, in its proposal has stated that open access charge shall be recovered from all consumers, opting for open access, through competitive suppliers till the currency of this NE-Plan or as amended by the Government, as per the following mechanism: (i) Grid charges, including use of transmission and distribution system charges, Market and system operator fee, cross subsidy charges, metering service charges; etc., shall be applicable to all such consumers; (ii) cost arising on account of open access, comprising of capacity costs, shall be applicable to all such consumers. Provided further, in case the government decides to reduce the open access charges or any of its components for the consumers opting for open access, it shall provide the funding to bridge the differential costs. While taking any such decision, the Ministry of Finance shall hire a third party consultant to evaluate and verify the impact of such change on the national exchequer and consumers of suppliers of last resort. The reduction or removal of such charges shall only be approved where fiscal space is available in the budget to support such reduction and consumers of suppliers of last resort are not burdened with these charges. Power Division has sought comments from stakeholders that if the directive 87 shall be deleted and replaced with open access charge shall be recovered as per the following mechanism: (i) Grid charges, including use of transmission and distribution system charges, Market and system operator fee, cross subsidy charges, metering service charges; etc., shall be recovered from all consumers, opting for open access, till the currency of this NE-Plan or as amended by the Government; (ii) The federal government shall provide the frameworks or policy guidelines, from time to time, stipulating the mechanism for recovery of the stranded costs on account of market liberalisation and open access. These frameworks/ policy guidelines shall reflect market realities and include measures/ incentives to facilitate open access/ wheeling of allocated quantum of capacity for a given period, introduce competition and transparency in the market and such other matters as it deems necessary to safeguard consumer interests and advance the economic and social policy objectives of the Federal Government. Provided that the quantum of capacity for first five years after issuance of the first framework shall be 800MW to be allocated in a competitive and transparent manner, which the federal government may revise keeping in view the market realities and need for further liberalisation. Provided further that, where no such frameworks or policy guidelines is applicable, such stranded costs shall be paid by all bulk power consumers of a competitive supplier and the amount of such stranded costs shall be the same as the total generation capacity charges recovered from the equally placed bulk power consumers of the suppliers of last resort either in a volumetric form (kWh) or through fixed charges and such charges shall continue to be paid in the said manner till such time as may be reviewed by the Federal Government as per the procedure laid down in the applicable policy and regulatory framework. However, Korangi Association of Trade & Industry (KATI) in its comments has opposed recovery of stranded costs from the competitive market participants arguing that his retroactive imposition contradicts fundamental principles of open access and economic dispatch. Bulk power consumers opting for competitive supply should not bear the cost burden of excess generation contracted by legacy utilities under take-or-pay PPAs. Such a provision dis-incentivizes migration to the competitive market, discredits investment confidence, and distorts price signals. The appropriate mechanisms for managing legacy stranded capacity include :( i) market-based capacity auctions; ii) ancillary service procurement from idle capacity and; iii) integration via balancing and reserve markets governed under the Commercial Code. The Association has also opposed the inclusion of hybrid bulk power consumers (those sourcing simultaneously from the Supplier of Last Resort and Competitive Suppliers) in the early phase of CTBCM. Without ring-fenced metering, enforceable capacity allocation, and standby cost attribution, such dual sourcing models will result in: (i) load forecasting errors and grid planning inefficiencies; ii) free-riding behaviour by hedging via SoLR; and (iii) imbalance settlements skewed against full competitive participants. The Association has strongly supported inclusion of Discos and K-Electric as competitive suppliers and dual tariff model for industrial consumers and enforcement of inverter compliance with IEEE/ Nepra Grid Codes, keeping in view the recent blackouts in Spain and Portugal. Copyright Business Recorder, 2025
Express Tribune
18-03-2025
- Business
- Express Tribune
Charter of economy presented to overcome challenges
Listen to article The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Tuesday shared a comprehensive charter of economy with Finance Minister Muhammad Aurangzeb and his team. An FPCCI delegation, led by its President Atif Ikram Sheikh and comprising Patron-in-Chief SM Tanveer and FF Steel Chief Executive Senator Noman Wazir Khattak, met the finance minister, where they emphasised that the charter had been developed to foster political consensus and form an effective economic strategy that could transcend political divide and address economic challenges. Their goal is to free the country from economic malaise by prioritising its development and growth in order to meet the needs of the growing population, especially the youth, who formed the core of Pakistan's demographic structure. Senator Khattak gave a detailed presentation on the proposals and recommendations outlined in the charter of economy. The key recommendations included the reorganisation of specialised civil services with the establishment of dedicated groups in critical sectors such as energy, finance, industry and health care to lead policy formulation and ensure informed decision-making. The charter called for embracing solar and wind energy, seen as the cheapest sources of power, and keeping wheeling charges for the Competitive Trading Bilateral Contract Market (CTBCM) at a maximum of Rs4 per kilowatt-hour. It emphasised greater focus on regional trade and development finance institutions, with at least 20% of lending directed towards long-term capital expenditure (capex) and 10% towards startup capex. A stable exchange rate was recommended to support exports and discourage imports that did not comply with the Pakistan Standards and Quality Control Authority (PSQCA) regulations. The charter stressed the importance of a uniform gas pricing structure for all industries to promote their growth. Other proposals included transferring the ownership of state-owned enterprises (SOEs) to employees to allow them to manage those enterprises or privatising them, and converting their pension funds into equity. The presentation proposed strategic reforms on various fronts, including debt management, trade partnerships, tax compliance, energy efficiency and the exploitation of mineral resources. It underlined the need for adopting a progressive taxation model for agriculture, better governance structures, pension and welfare reforms, digitalisation and improvement to the bankruptcy law. Finance Minister Muhammad Aurangzeb, while praising the preparation of the Charter of Economy, noted that such initiatives were crucial at this point in time. He recalled his involvement in drawing up a similar charter by the Pakistan Business Council in 2020 and highlighted the importance of uniting all stakeholders on a common platform to address the challenges of declining living standards and achieve sustainable economic growth. He reiterated that quick fixes would not suffice and a steady, unified effort was required to drive Pakistan's economic recovery. Aurangzeb also highlighted the ongoing reforms that targeted macroeconomic stability, taxation, energy and rightsizing of the federal government. He assured the delegation of the commitment to resolving the pressing issues.
