Nepra fines power firm for false regulatory filings

ISLAMABAD: In a rare move, the National Electric Power Regulatory Authority (Nepra) has imposed a Rs50 million fine on a public sector electricity generation company for misleading regulatory filing negatively affecting electricity rates and issued show-cause notices to two other SOEs in the power sector for violation of rules and regulations.

In its order, the regulator imposed a Rs50m fine on Central Power Generation Company Ltd’s (CPGCL) Guddu Thermal Power Station for procuring a gas booster free of cost from Engro Corp and charging more than Rs1.24 billion in its tariff for the booster instead of disclosing the true picture.

The regulator has also found Central Power Purchasing Agency (CPPA) and National Transmission and Despatch Company (NTDC) — the two other state-owned entities under the Power Division — in violation of rules and regulatory orders for signing operating procedure manuals and black start procedures with a dozen of power producers after the nationwide power breakdown in January 2021 and issued them show-cause notices before imposing up to Rs200m fine.

Nepra said that Northern Power Generation Company Ltd (NPGCL) claimed in October 2020 that its tariff cost of Nandipur plant conversion on gas was Rs5.428bn. One of the items of gas conversion cost pertained to the cost of the Gas Booster Compressor Station (GBCS) transferred by CPGCL, which had procured the GBCS from Engro Fertiliser free of cost for facilitating 60mmcfd gas quota for more than 10 months starting May 15, 2025.

During public hearings, CPGCL did not disclose that GBCS had been acquired free of cost and later claimed that its Rs1.24bn was a fair value estimated based on the cost of compressors CPGCL was procuring for its 747MW plant. The value of GBCS was approved by the board of directors of both the generation companies and a credit note worth Rs1.242bn was issued by NPGCL to CPGCL. “While determining the tariff of 747MW Guddu power plant, Nepra allowed gas booster compressor station cost of Rs1.465 billion. CPGCL did not inform during the proceedings,” the order noted.

A subsequent disclosure led Nepra to order an investigation, show-cause notice to CPGCL and a hearing process where the regulator found the generation company violating relevant rules and regulations and that the Economic Coordination Committee of the cabinet had not approved the transaction.

The regulator asked the company to get it cleared from the ECC and have signed statements from the chief executive officer and relevant other officers to cover the transaction.

The CPGCL claimed it had provided ECC approval, but the past officers were no longer available to sign previous transactions. The regulator did not accept these explanations and concluded that the ECC decision claimed by the CPGCL pertained to the installation of GBCS at 747mw Guddu Plant by Engro Fertilisers in consideration of the usage of 60mmcfd gas from Mari Shallow by Engro Fertilisers till 31.12.2015 and the re-allocation of 60mmcfd gas from Mari Shallow to Guddu plant.

The CPGCL did not provide a “copy of any ECC decision in support of extending its facilitation to Engro Fertilisers to use its re-allocation of 60MMCFD gas from Mari Shallow Gas from Jan 1, 2016 to March 31, 2016.

Published in Dawn, October 18th, 2024