ISLAMABAD              -          Experts from coal industry Thursday underlined the need for the procurement of imported coal through competitive pricing mechanism to ensure cheap rates of the commodity for power generation which will help reduce the generation cost from this source.

Addressing during fourth day of NEPRA Energy Week 2020, the international experts from United Kingdom and Singapore discussed the details about optimizing the procurement of imported coal through competitive pricing mechanism. During the session, the experts provided the global comparison of the international coal pricing, mechanism of price adjustment and its impact on electricity price.

The international experts from global coal industry stated that the current coal pricing mechanism in NEPRA is formulaic although it is benchmark to indices. There are examples in the world where coal is being procured on tendering basis with index as a ceiling. The level of tendering to meet the whole or part of IPP’s annual coal requirement depends on specific market where they are operating.

They said that there are a lot of changes going on in the global coal market where coal from as far as Colombia (Latin America) and Russia is available at a competitive price to South Africa. Therefore a mechanism should be dynamic which capture the trend in global coal market to capture the best price for the consumers. A representative of Trade Cloud suggested that there are online platforms available where buyers and sellers agree on a coal price and all that transactions and negotiation capture through that platform thus brining visibility to the whole coal procurement/pricing regime.

Member NEPRA Rahmatullah Baloch in his speech said that transmission sector has vital role in provision of safe, reliable and sustainable electricity. He highlighted the issues and challenges faced by the transmission sector. He stressed on resolving the issues i.e. evacuation from renewable resources (wind and hydro, timely completion of the interconnection and frequent tripping) which affected the economy as a whole and end-consumers particularly.

Talking about the challenges faced by the transmission sector of Pakistan, Baloch said that NTDC license has been awarded to Sindh Transmission & Dispatch Company (STDC) for transmission of power in the province of Sindh. In the previous arrangement, there was NTDC only for entire Pakistan excluding Karachi but like Sindh other provinces may also obtain license for engaging in transmission of power business in their respective provinces along with NTDC. The question arises as to how this new arrangement would function smoothly.

He said that constraints in evacuation of power results in payment of capacity charges to GENCOs, IPPS and non-project missed volume (NPMV) to renewable generating companies which results in high cost of energy mix of CPPA-G.

Third, wheeling of electric power has been allowed vide NEPRA (Wheeling of Electric Power) Regulations, 2016 which provides generation licensees to sale power to BPCs by using transmission and distribution network of other companies. The issue pertaining to centralized vs self-dispatch, banking of energy, network losses, Use of System Charges (UoSC) and stranded costs need to be addressed in the current wheeling regime.

He said that the concept of HVDC transmission has been introduced for the first time in Pakistan. In this regard, 878 km, ±660 kV HVDC transmission line from Matiari to Lahore is under construction for evacuation of 4000 MW power from south to north. The scheduled COD of this project is 1st March, 2021. The timely construction of interconnection facilities of the power plants for feeding in and the allied transmission lines for evacuation of power is imperative. Delay may cause imposition of liquidated damages (LDs).

Alternate energy and power transfer through HVDC network are coming in the field. The existing Grid Code needs to be amended and aligned accordingly, he added. The transmission system security, reliability and stability need to be enhanced by developing benchmarks in light of the best international and regional practices to avoid cascaded outages, major system disturbances in the form of partial system collapses or blackouts.