Mianwali Road, Jauharabad City, District Khushab in the Province of Punjab
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J National Electric Power Regulatory Authority Islamic Republic of Pakistan NEPRA Tower, Attaturk Avenue (East), G-511, Islamabad. Ph: +92-51-9206500, Fax: +92-51-2600026 Registrar Web: www.nepra.org.pk, E-mail: [email protected] September 19, 2017 No. NEPRA/R/DI/LAG-366/ /376,?-7, Mr. Amjad Javed Ahab Deputy General Manager, Jauharabad Sugar Mills Limited (.1BDSMI.) I 09-A, Street No. 3. Cavalry Ground, I.ahore Cana. Phone: 92 42-36670031 Subject: Grant of Generation Licence No. SGC/121/2017 Licence Application No. LAG-366 Jauharabad Sugar Mills Limited (JIMSML) RefiTence: Your applicalion vide leiter No. .151112ELECT/LICENSE-2, (Idled Augusi 20, 2016 (received 22. 2016). Enclosed please find herewith Generation Licence No. SGC/121/2017 granted by National Electric Power Regulatory Authority (NEPRA) to "Jauharabad Sugar Mills I,imited (.113DSMI,) for its 21.44 MW I3agasse based Generation Facility/Co-Generation Facility located at 1.5 KM Ileavy Industrial Area, Sarg,odha-Mianwali Road, Jauharabad City, Disircit Khushab, in the province of Punjab. pursuant to Section 15 of the Regulation of Generation. Transmission and Distribution of Electric Power Act (XI, of 1997). Please quote above mentioned Generation 1 i ••No. tor Future correspondence. ER Enclosure: Generation Licence (SGC/121/2017) (-9 Cfe '1 (Syed Safeer Ilussain) Copy to: NEPrikt' 1. Secretary Power Division, Ministry of Energy, A-Block, Pak Secretariat. Islamabad. 2. Chief' Executive Officer, NTDC, 4I4-WAPDA I louse, Lahore. 3. Chief Executive Officer. CPPA-G, EN ERCON Building, Sector G-5/2, Islamabad. 4. Chief Executive Officer, Faisalabad Electric Supply Company Limited, Canal Road. Faisalabad 5. Director General, Environment Protection Department. Government of Punjab. National I lockey Stadium, Ferozpur Road, Lahore. National Electric Power Regulatory Authority NEPRA Determination of the Authority in the Matter of Application of Jauharabad Sugar Mills Limited for the Grant of Generation Licence September , 2017 Case No. LAG-366 (A). Background (i). Jauharabad Sugar Mills Limited (JBDSML) is maintaining and operating a bagasse based Captive Power Plant-CPP at its mill located at 1.5 km-Jauharabad, district Khushab, in the province of Punjab. The existing capacity of the said CPP is 7.00 MW which is being enhanced to 21.44 MW. (ii). JBDSML offered the concerned distribution company/utility of its area supplying surplus electric power from the above mentioned CPP. According to the Regulation of Generation, Transmission and Distribution of Electric Power Act (the "NEPRA Act"), JBDSML is required having generation licence. (B). Filing of Application (i). JBDSML submitted an application on August 22, 2016 for the grant of generation licence in terms of Section-15 of the NEPRA Act read with the relevant provisions of the NEPRA Licensing (Application and Modification Procedure) Regulations, 1999 (the "Licensing Regulations"). (ii). The Registrar examined the submitted application and observed that the application lacked some of the required information/documentation. Accordingly, JBDSML was directed for submitting the missing information/documentation and the same was received on September 29, 2016. er the receipt of the required information, the Registrar submitted the matter for consideration of the Authority for admitting the application or otherwise. The thority considered the matter and found the form and content of the application in substantial compliance with Regulation-3 of the Licensing Regulations. Accordingly, the Authority admitted the application on October 07, 2016 for consideration of the grant of the generation licence as stipulated in Regulation-7 Page 1 of 9 of the Licensing Regulations. The Authority approved an advertisement to invite comments of general public, interested and affected persons in the matter as stipulated in Regulation-8 of the Licensing Regulations. Accordingly, notices were published in one (01) Urdu and one (01) English newspapers on October 14, 2016. (iii). In addition to the above, the Authority approved a list of stakeholders for seeking their comments for the assistance of the Authority in the matter in terms of Regulation-9(2) of the Licensing Regulations. Accordingly, letters were sent to different stakeholders as per the approved list on October 14, 2016, soliciting their comments for the assistance of the Authority. (C). Comments of Stakeholders (0. In reply to the above, the Authority received comments from four (04) stakeholders. These included Ministry of Petroleum and Natural Resources (MoP&NR), National Transmission & Desptach Company Limited (NTDC), Alternative Energy Development Board (AEDB) and Anwar Kamal Law Associates (AKLA). The salient points of the comments offered by the said stakeholders are summarized in the following paragraphs. (a). MoP&NR stated that JBDSML intends to install CPP based on bagasse as fuel and as such, no gas is required for utilization in this project. Therefore, the Ministry has no objection/comments for grant of generation licence to JBDSML for its bagasse based CPP; (b). NTDC submitted that Grid Interconnection Study (GIS) for CPP has not been received which is a requirement for the grant of generation licence; (c). AEDB commented that JBDSML approached it for the development of an 18.00 MW generation facility/Co-generation facility based on high pressure boiler technology. Accordingly, a Letter of Intent (Lol) was issued to the Special Purpose Vehicle (SPV) of the sponsors in the name of Radiant Power (Pvt.) Limited under the relevant Renewable Energy (RE) policy in vogue. AEDB supported the grant of generation licence to JBDSML as per the provision of the relevant regulation and rules; and (d). AKLA highlighted different issues pertaining to the Power Sector of the country including (a). surplus capacity; (b) underutilization of power plants; and (c). induction of new power plants on "take or pay" basis etc. Further, AKLA contested that RE power plants are not viable financially and economically due to higher upfront tariff and "must run condition". AKLA also questioned the induction of RE projects in the current scenario (i.e. reduction in oil prices, RLNG contract with Qatar, upcoming coal power projects and introduction of competitive market etc.), affordability vs. availability of electric power and long term Power Purchase Agreements (PPAs) on "take or pay" basis etc. AKLA stated that it is not against setting up of new power plants and in this regard a very careful estimate of required generation capacities should be made or the licences should be granted on "take and pay" basis. (ii). The Authority considered the above comments of the stakeholders and in view the observations of NTDC, AEDB and AKLA considered it appropriate seeking the perspective of JBDSML. On the observations of NTDC, it was submitted that services of Power Planners International were hired for carrying out the required GIS. The said study had been completed and submitted to the Page 3 of 9 Faisalabad Electric Supply Company Limited (FESCO) for its approval. Regarding the comments of AEDB, it was submitted that JBDSML once planned to set up a 18.00 MW high pressure boiler based generation facility but later on the idea was dropped and the project was accordingly shelved for which AEDB has also been informed. It was clarified that JBDSML is now only pursing its plan to supply surplus to the tune 8.00 MW-10.00 MW to FESCO from its existing CPP. (iii). About the observations of AKLA, it was stated that JBDSML has approached the Authority for grant of the generation licence as it intends supplying surplus electric power to distribution utility from its CPP. In this regard, it is envisaged that PPA or Energy Purchase Agreement (EPA) will be made on "take and pay" basis meaning thereby that the company will be paid for the unit supplied to the utility without any capacity payment. In view of the above, JBDSML requested the Authority to disregard the comments which are completely irrelevant and have no specific implication on its application for the grant of generation licence. (iv). The Authority considered the above submissions and considered it appropriate to proceed further in the matter of application of JBDSML for the consideration of grant of generation licence as stipulated in the Licensing Regulations and NEPRA Licensing (Generation), Rules 2000 (the "Generation Rules"). (D). Evaluation of the Case (i). The Authority has considered the submissions of JBDSML including the information provided in its application for the grant of generation licence including GIS and the relevant rules & regulations. The observations of the uthority in the matter are explained in the following paragraphs. iLU REGISTRAR (ii). JBDSML is a pioneer in the sugar industry and was originally 0 orporated under the Companies Act, VII of 1913 vide No. C 68/LR of 968-1969 dated December 31, 1968 in the name of "Kohinoor Sugar Mills Limited". It is a public limited company listed on Pakistan Stock Exchange Limited and has been in operation for almost fifty years. The company is involved in the business of production of sugar and allied products i.e. molasses, bagasse and Page 4 of 9 mud etc. The company is a going concern and as per latest balance sheet has a total assets of Rs. 5.75 billion. (iii). The sugar mill currently has crushing capacity of 7000 Tons of sugar cane per day (TCD) which produces a bagasse of around 2100 Tons. In order to utilize the said generated bagasse, JBDSML has set up a 7.00 MW CPP which is now being enhanced to 21.44 MW. The said CPP consists of three (03) back pressure steam turbines. In this regard, JBDSML has informed that it intends supplying around 8.00-10.00 MW of surplus power to FESCO on "Take and Pay" basis. (iv). In consideration above, JBDSML has got completed GIS whereby it has been determined that the CPP will be connected to the Jauharabad grid station of FESCO through 11 KV Double Circuit (D/C) feeder (on ACSR Osprey conductor measuring about 2-KM in length).