NEPRA grants first transmission license to private company

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The National Electric Power Regulatory Authority (NEPRA) on Tuesday granted a private company, Fatima Transmission Company Limited (FTCL), a special purpose transmission license for constructing and owning transmission facilities.

Under the license, the FTCL would set up a 37 km long transmission line in Muzaffargarh for evacuating 120MW electricity from generation facilities to supply to its bulk power consumers which are subsidiary companies of the group including Fatima Sugar, Fazal Cloth Mills, Reliance Weaving Mills and Pak-Arab Fertilizer.

The NEPRA Act allows that in addition to National Transmission and Dispatch Company (NTDC), other entities including the private sector can construct, own and operate transmission facilities for providing interconnection services to NTDC and others.

Although the public sector is mainly responsible for developing extra high voltage (EHV) 66000 volts and above transmission facilities, however it is noted that it could not upgrade and develop its system according to the required reliability levels leading to severe bottlenecks and congestions in the transmission system.

As a consequence, not only power plants in the system were forced to operate without merit but major breakdowns of electric power were also experienced. It is also noted that with the planned generation facilities over next four to five years, a large quantum of power is required to be transmitted by the NTDC.

Since construction of new EHV transmission facilities is highly capital intensive, therefore there is every probability that the NTDC would not be able to generate such huge funding needs. It will also be difficult for the government to pump such large amounts of investments in the transmission sector due to its financial constraints and operational issues.

A special purpose transmission licensing regime would enhance the existing transmission capacity and will also result in installation of new power transmission infrastructure. It would create avenues for huge private investment which could be made for mutual bilateral contracts between supplier and consumers or for providing service to the NTDC.