Nepra initiates legal proceedings against three IPPs over supply lapse

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has initiated formal legal proceedings by issuing show-cause notices to three independent power producers (IPPs) for their inability to restore power supply to the national grid after a countrywide breakdown in January last year.
The development came after detailed investigations into three power projects — 1,320MW Sahiwal Coal Power Project (operated by Huaneng Shandong Ruyi of China), 450MW Rousch Power Plant in Khanewal, and 134MW Saba Power Project — all of which failed to synchronise their generating units with the national grid within the stipulated contractual timelines.
The sponsors of all three projects were given an opportunity to file explanations which were cross-examined with the available data and other documentary evidence both from the power plants and the national grid and financial system operators — the National Power Control Centre (NPCC) and Central Power Purchasing Agency (CPPA).
Based on the findings of the probe committee, the regulator decided to formally hold the plants accountable through show-cause notices for the imposition of penalties.
On Jan 23 last year, a nationwide power system breakdown occurred in the morning, causing widespread darkness. The system was fully restored 20 hours later. In response, the regulator formed an inquiry committee to investigate the incident.
The committee conducted a thorough probe, visiting powerhouses, grid stations, sites and offices and examining relevant documents to determine the causes of the breakdown.
The committee concluded that the IPPs could not meet contractual obligations when the NPCC called for the restoration of the power supply and “failed to comply with NPCC’s instructions in a timely manner, which severely hampered the restoration process of the power system”.
The management of the Sahiwal plant asserted that the start-up procedure following an accident or blackout differs from normal situations, highlighting their “responsible and prompt” efforts to restore power in accordance with “prudent utility practices”.
They also justified the synchronisation delay, citing the need for additional time to normalise various plant components after a blackout.
The regulator noted that Sahiwal power plant’s response raised concern over multiple fronts, including the submission of blackout procedures to system operations in 2022 for equipment integrity, which were not signed by the NPCC and CPPA.
Furthermore, the regulator noted that the blackout procedure should have been finalised by January 2018, as per the rules, highlighting a major lapse of almost five years.
Moreover, units 1 and 2 of the Sahiwal plant did not synchronise with the national grid in accordance with NPCC’s instructions. Therefore, the regulator found that the IPP’s response was “deficient in addressing the fundamental issues, such as the substantial delay in synchronisation and the absence of a finalised operating procedure” and did not adequately address the concerns raised by the regulator.
Similar shortcomings were also found in the matter of two smaller IPPs — Rousch and Saba Power.
In the case of Rousch Power, Nepra concluded that the plant operators should have included any necessary additional time, agreed upon by the CPPA-G and NPCC, for the recovery of the power complex from total power system collapse in the operating procedures manual beforehand, which they failed to do. Therefore, the defence advanced by the power plant was unjustified.
Therefore, the regulator decided to formally start legal action against all three IPPs under relevant rules by issuing show-cause notices to them. The IPPs would be given time to defend their cases in writing with evidence and have the right to a personal hearing before the regulator could impose penalties for failure to meet contractual obligations, leading to extended periods of power failures in most parts of the country for almost 20 hours.
Published in Dawn, September 17th, 2024