COR in the matter of Show Cause Notice

issued to CPGCL due to prolonged

forced outage of Unit 14 of Guddu 747
M&E
 Background
Unit 14 of Guddu 747 went under forced outage on February 12, 2021. On enquiry, M/s CPGCL submitted that the Unit
was on outage due to temperature spread issue. However, M/s CPGCL did not provide any details regarding the defect as
was required by NEPRA. The Authority directed to issue an Explanation Letter to M/s CPGCL.
Accordingly, an Explanation Letter was issued on February 04, 2022. M/s CPGCL submitted its response on April 16,
2022. Which is summarized as under
CPGCL reiterated that in February 2021, GT-14 started having high temperature spreads. The matter was started with
the tripping of ST-16 on over flux while GT-14 running in latched condition with ST-16, shed load to minimum on unit.
After the resynchronization of ST-16, the load on GT-14 was increased to maximum but the load could not be
increased due to problem of temperature spread.

With regards to the reasons for prolonged forced outage, CPGCL informed that the main reason of prolonged forced
outage of GT-14 was the time consume to negotiate with M/s GE being sole proprietor of the 9FA machine & OEM as
all the damaged parts repaired/procured from outside the country i.e. Atlanta, UAE, etc.

Another reason for the delay was due to the fact that CPGCL applied for LC on Delivery Duty Paid (DDP) basis which
was restrained due to change in policy of State Bank of Pakistan and redirected to open the LC on Carriage Paid To
(CPT) basis, which again took almost 03-04 months in process.
 Background
 CPGCL submitted that LC for the required restoration material of GT-14 has been established on March 31, 2022, the
shipment of spare parts is in process and expected date of arrival of material at Karachi-port is 1st week of May 2022.
After Customs clearance and transportation of material at site, approximately 20 days will be required to M/s GE for
installation. Therefore, GT-14 will be operational by June 15, 2022.

 Furthermore, CPGCL claimed that it is facing critical cash flow issues due to increase in its receivables, (approximately Rs.
84 billion from CPPA-G). Consequently, CPGCL is unable to perform the procurement of material timely for the
maintenance of the machines.

The Authority after detailed deliberation rejected the response of M/s CPGCL and directed to issue a Show
Cause Notice for not submitting the Root Cause Analysis and for its failure to satisfy the Authority regarding
maintaining its plant as per prudent utility practices. Accordingly, a Show Cause Notice dated July 04, 2022, was issued
to M/s CPGCL.
In response, CEO CPGCL vide his letter dated July 22, 2022 submitted that the previous CEO CPGCL had resigned on June 30,
2022, and in the CEO’s absence he had the current charge of acting CEO. Furthermore, he submitted that due to the incident
on ST-16 of Guddu 747, the workload had increased and day-to-day tasks had become more arduous, accordingly, the acting
CEO CPGCL requested for an extension of at least one month.
Background
The Authority acceded to the request of CPGCL and granted an extension till August 15, 2022. However,
CPGCL failed to provide a response within the stipulated time.
It is pertinent to mention here that the Authority vide RM 22-175 had decided that in case of non-
provision of response by a licensee to NEPRA’s Explanation/Show Cause Notice within the specified time,
no further reminder will be issued and the case will be decided as ex parte by the Authority.
Consequently, the case was referred to ADG (Legal/M&E) to provide his opinion regarding whether an
opportunity of hearing, under Regulation 4(11) of the NEPRA (Fine) Regulations, 2021, be provided to M/s
CPGCL in the subject matter or the case may be processed on Ex Parte basis as per the decision of RM 22-
175.
In response, ADG (Legal/M&E) opined that since the Authority had already granted CPGCL an extension of
30 days at the CEO’s behest and Regulation 4(11) of the NEPRA (Fine) Regulations, 2021, allows a period of
15 days for a response to be submitted, the case may be proceeded on Ex Parte basis.
 Background
The case was referred to the Authority for a decision in the matter, in circulation, that whether the case be
decided on Ex Parte basis or an opportunity of hearing be provided to CPGCL under Regulation 4(11) of
NEPRA (Fine) Regulations, 2021.
The Authority directed M&E to put up the case before it. Accordingly, the case was presented before the
Authority. The Authority directed to call CPGCL for a hearing.
Accordingly, a hearing was scheduled for October 27, 2022, however, CEO CPGCL through his email dated
October 26, 2022 requested for postponement of the hearing. Also, CPGCL submitted its response to
NEPRA’s Show Cause Notice through the Ibid email, wherein, it reiterated its stance as taken during the
response to NEPRA’s Explanation Letter.
The Authority acceded to request of CEO CPGCL and the hearing was held on November 10, 2022.
Hearing of M/s CPGCL
The Authority enquired from CEO CPGCL regarding the reasons for delay in restoration of the damaged
Unit. CEO CPGCL explained that after detailed inspection it was decided to refer the case to GE, (OEM of the
plant) to determine the extent of damage.
CEO CPGCL informed that after the incident, the plant management was arrested, therefore, no one was
available to make timely decisions. CEO CPGCL further submitted that the subject failure was not due to a
negligence of the maintenance team at CPGCL, however, it was due to failure of the internal part of Gas
Turbine which caused the defect and prolonged forced outage.
Furthermore, the inspection team of GE had to move to Pakistan for inspection which caused logistic
delays and resulted in delay in restoration of the Unit
The Authority enquired from CEO CPGCL that why the Unit was not insured. CEO CPGCL informed that
insurance was carried out after the incident. However, CEO CPGCL submitted that the financial status of the
generation company did not allow for engaging an insurance company. The Authority directed CPGCL to
submit details and reasons for not insuring the plant.
 Hearing of M/s CPGCL
CEO CPGCL further submitted that the case of temperature spread was shared with GE team, however, the GE team
informed that the issue is not serious and the Unit 14 may continue to generate energy as usual.
Chairman NEPRA enquired that in case there was a single contract with GE, then why PPRA rules had to be referred. In
reply, CPGCL informed that there was no substantial delay due to the PPRA rules.
The Authority directed M/s CPGCL to submit the order of the BoD for removal of the Ex-CEO of CPGCL which has been
submitted by M/s CPGCL.
The Authority directed M/s CPGCL to submit reasons for not insuring its plant. In response, CPGCL has informed that it
tried to insure the plant on multiple occasions, however, CPGCL being a government owned company is bound to get
insurance from NICL as per the Insurance Ordinance 2000.
CPGCL further informed that it has been requesting NICL to obtain the All-Risk Insurance Coverage as per international
standards since 2015, however, no tender has matured yet.
As a time-gap arrangement, Hold Cover was issued for 2018 – 2020. For the tender of 2020 GENCO II requested
NICL/PRCL to get the insurance coverage from the bidder whatever coverage they had offered and for the remaining
coverage tenders may be issued again. But NICL/PRCL refused to accept the request of CPGCL.
Another tender was floated in 2021 but was not matured.
 M&E’s Analysis
It has been observed that CPGCL’s management did not take action in a timely manner after the incident had taken
place. As per the submission of current CEO CPGCL, the order for replacement of the damaged turbine was raised in
October 2021 i.e. almost 8 months after the incident.
Furthermore, it was found that the damaged Unit was not insured. In case the Unit was insured the restoration time
would have been much shorter and would have resulted in saving millions of rupees.
It is pertinent to mention here that the Authority vide tariff determination, dated April 26, 2016, filed by CPGCL for
determination of generation tariff for Guddu 747 had determined the insurance component for the power plant.
However, M/s CPGCL failed to insure its Units which led to the loss of millions of rupees to the national exchequer
The operation of the power plant was with CPGCL staff, therefore, on indication of high temperature spread, the case
should have been investigated thoroughly rather than only relying on the information provided by GE representative.
Moreover, the time taken for the decision to contact GE delayed the restoration process which is a negligence on part of
CPGCL.
In view of the above analysis, it is concluded that CPGCL failed to act in an effective manner and reduce the time for
restoration of the damaged Unit.
Recommendation
In light of M/s CPGCL’s response to NEPRA’s Show Cause Notice and submissions made during
the hearing, it is recommended to impose a fine on M/s CPGCL, as deemed appropriate by the
Authority, for violating Section 14(B)-4 of the NEPRA Act, read with Clause SDC 1.4.1.2 of the
Grid Code and for its failure to comply with the direction of the Authority issued vide its tariff
determination for insuring the power plant.
Thank You