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National Electric Power Regulatory Authority nann Islamic Republic of Pakistan NEPRA Tower, Attaturk Avenue (East), G-511, Islamabad Registrar Ph:+92-51-9206500, Fax: +92-51-2600026 Web: www.nepra.org.pk, E-mail: [email protected] No. NEPRA/R/DL/LAG-279/ (c c 3 July 15, 2015 Mr. Najam UI Hasnain, Chief Executive Officer, Sindh Nooriabad Power Company (Pvt.) Limited, 28, Army Housing Scheme, National Stadium Colony, Karachi. Subject: Generation Licence No. IGSPL/63/2015 Licence Application No. LAG-279 Sindh Nooriabad Power Company (Pvt.) Limited (SNPCPL) Reference: Your application vide letter No. Nil, dated Nil, received on August 21, 2014. Enclosed please find herewith Generation Licence No. IGSPL/63/2015 granted by National Electric Power Regulatory Authority (NEPRA) to Sindh Nooriabad Power Company (Pvt.) Limited, pursuant to Section 15 of the Regulation of Generation, Transmission and Distribution of Electric Power Act (XL of 1997). Further, the determination of the Authority in the subject matter is also attached. 2. Please quote above mentioned Generation Licence No. for future correspondence. Enclosure: Generation Licence (IGSPL/63/2015) Vq‘ (Syed Safeer Hussain) AS Copy to: 1. Chief Executive Officer, Hyderabad E y Limited (HESCO), Old State Bank Building, G.O.R Colony, Hy 2. Chief Executive Officer, K-Electric Ltd, K , Sunset Boulevard, Phase-II, DHA, Karachi. 3. Chief Executive Officer, NTDC, 414-WAPDA House, Lahore 4. Chief Operating Officer, CPPA-G, 107-WAPDA House, Lahore 5. Director General, Environment and Alternative Energy Department, Government of Sindh, Plot No ST/2/1, Sector 23, Korangi Industrial Area, Karachi. th 6. Secretary, Energy Department, Government of Sindh, Lackson Building 3, Floor, Sarwar Shaheed Road, Opposite Karachi Press Club, Karachi. 7. Chief Secretary, Government of Sindh, Sindh Secretariat, Karachi. 8. Secretary, Ministry of Water and Power, A-Block, Pak Secretariat, Islamabad. National Electric Power Regulatory Authority (NEPRA) Determination of the Authority in the Matter of Application of Sindh Nooriabad Power Company (Pvt.) Limited for the Grant of Generation Licence July 13, 2015 Case No. LAG-279 (A). Background (i). The Electric Power Sector of the country is experiencing a Demand- Supply gap. In order to reduce the said deficit, all efforts are being made to develop indigenous resources. The Constitution of Pakistan, empowers the provinces to set up generation facilities of any size, location and fuel of their choice. (ii). In view of the above, the Government of Sindh (GoS) has decided to Build, Own and Operate generation facilities at various industrial estates of the province. One of such projects is proposed to be set up at SITE, Nooriabad and envisaged to be developed on Public Private Partnership mode/basis. In order to implement the project, the GoS has incorporated a Special Purpose Vehicle (under the provisions of the Companies Ordinance 1984) in the name of Sindh Nooriabad Power Company (Pvt.) Limited (SNPCPL) (iii). The Industrial estate of SITE Nooriabad is located within the Service Territory of Hyderabad Electric Supply Company Limited (HESCO). Therefore, SNPCPL decided approaching HESCO for supplying electric power from its prospective Generation Facility. (B). Filing of the Application (i). In accordance with Section-15 of Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 (the NEPRA Act), SNPCPL Page 1 of 11 filed/submitted an application on August 21, 2014 requesting for the grant of Generation Licence. (ii). The Registrar examined the submitted application to confirm its compliance with the NEPRA Licensing (Application and Modification Procedure) Regulations, 1999 (the "Regulations"). The Registrar observed that the application lacked some of the required information/documentation as stipulated in the Regulations. Accordingly, SNPCPL was directed to submit the missing information/documentation. SNPCPL completed the missing information/ documentation on October 09, 2014. The Authority considered the matter in its Regulatory Meeting (RM-14-761), held on November 18, 2014 and found the form and content of the application in substantial compliance with Regulation-3 of the Regulations. Accordingly, the Authority admitted the application for consideration of the grant of Generation Licence as stipulated in Regulation-7 of the Regulations. The Authority approved the advertisement [containing (a). the prospectus; (b). a notice to the general public about the admission of the application of SNPCPL]. inviting the general public for submitting their comments in the matter as stipulated in Regulation- 8 of the Regulations. Further, the Authority also approved the list of the relevant stakeholders for informing about the admission of the application of SNPCPL and for providing their comments to assist the Authority in the matter Accordingly, the advertisement was published in one Urdu and one English National Newspaper on November 22 & 24, 2014. (iii). Apart from the above, separate letters were also sent to Government Ministries, their Attached Departments, Representative Organizations and Individual Experts etc. on November 25, 2014. The said stakeholders were urged to submit their views/comments for the assistance of the Authority. (C). Comments of Stakeholders (i). In reply to the above, the Authority received comments from four (04) stakeholders. These included HESCO, Energy Department Govt. of Sindh (EDGoS), Central Power Purchasing Agency (CPPA) of National Transmission & Despatch Company Limited (NTDC) and Ministry of Water & Power (MoW&P) The salien Page 2 of 11 points of the comments offered by the above stakeholder are summarized in the following paragraphs: - (a). HESCO commented that it issued Letter of Intent (Lol) to SNPCPL but the sponsors of project failed to achieve milestones within the stipulated time therefore, the Lol was cancelled. Further, HESCO stated that lately, a large number of private power projects of approximately 1800 MW are in pipeline against its demand of 800 MW. HESCO submitted that in view of the future projects and the Demand-Supply situation, it cannot support the grant of Generation Licence to SNPCPL as Lol stands terminated. However, SNPCPL may apply for a fresh Lol, if it is still interested in selling to HESCO; (b). EDGoS supported the request of SNPCPL for the grant of Generation Licence; (C). CPPA did not express any reservations pertaining to the request of SNPCPL, subject to meeting with the conditions laid down in the NEPRA Licensing (Generation) Rules 2000 (the Rules); and (d). MoW&P commented that the Authority may process the application of SNPCPL as per the provisions of NEPRA Act and Policy guidelines of the Government (ii). The Authority examined the above comments of the stakeholders and found to be supportive except to the observations of HESCO. In view of the said, the Authority decided seeking perspective of SNPCPL on the observations of HESCO in terms of Regulation 9(2) of the Regulations. In its rejoinder, SNPCPL clarified that the proposal was submitted to HESCO on September 18, 2012. The Lol was issued on March 25, 2014 after a lapse of almost one and half years which shows the non- seriousness of the DISCO towards the Investor(s) SNPCPL objected the Supply- Demand projections of HESCO and confirmed that the project has commitment orf j Page 3 of 11 Natural Gas for twenty (25) years therefore, denying purchase of electric power from such projects is not justified. SNPCPL stated that from the submission of HESCO, it can be concluded that HESCO is not interested in purchasing power from it. (0). Change of Power Purchaser (i). In consideration of the above, SNPCPL made a fresh submission to the Authority stating that due to lack of interest of HESCO, it has decided to change the Power Purchaser. In this regard, SNPCLPL submitted that its power purchaser may be changed from HESCO to K-Electric Limited (KEL). (ii). The Authority considered the request of SNPCPL on the change of Power Purchaser in its Regulatory Meeting (RM-15-37), held on January 13, 2015. The Authority decided seeking a clarification from the Gas Supplier i.e Sui Southern Gas Company Limited (SSGC) whether the change of Power Purchaser will have an implication on the Gas Supply Agreement (GSA) or otherwise? (iii). In reply to above, SSGC informed that it initialed a GSA for supplying 10.00 MMCFD of pipeline quality Natural Gas to SNPCPL for a period of twenty five (25) years. SSGC also confirmed that the change of the power purchaser from HESCO to KEL will not have any impact on the executed GSA with SNPCPL. (E). Consideration of Request (i). The Authority considered the above submissions of SSGC and decided issuing an addendum to the already published notice dated November 22 & 24, 2014. The addendum was published in the press on dated February 26, 2015. (ii). In the above addendum the stakeholders, interested/affected persons and the general public were informed about the change of power purchaser from HESCO to KEL. Further, the above stakeholders were directed for submitting comments either in favor or against the grant of Generation Licence. Page 4 of 11 (iii). Apart from the above, Government Ministries their Attached Departments, Representative Organizations and Individual Experts etc. were also informed about the change of power purchaser through letters dated March 03, 2015. Similarly the said organizations and individuals were also directed for submitting their views in the matter. (F). Fresh Comments (i). In reply to the above, the Authority received comments from HESCO, SSGC, CPPA and EDGoS. In their fresh comments HESCO, SSGC and EDGoS maintained their respective earlier stance as explained above. Whereas, CPPA submitted that the company intends to sell power to KEL. Therefore, the related power evacuation plan is required to identify the route of dispersal of power from the Generation Facility to the network of KEL. This may include usage of networks) of HESCO or NTDC. However, in case of involvement of the network of NTDC, the company will have to submit "Interconnection Study Report" for vetting/approval of Planning Department of NTDC.

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