Central Power Purchasing Agency Explained

Central Power Purchasing Agency
Type:	Government-owned
Foundation:	2015
Location:	Islamabad, Pakistan

Central Power Purchasing Agency-Guarantee (CPPA-G) is the market operator in Pakistan and is facilitating the power market transition from the current single buyer to a competitive market.

It was established in 2015 and was separated from the National Transmission & Despatch Company.^[1]

Central Power Purchasing Agency (CPPA-G) is a Company incorporated under the Companies Ordinance, 1984 and wholly owned by the Government of Pakistan (the “GOP”). Since June 2015, CPPA-G has assumed the business of National Transmission and Dispatch Company (the “NTDC”) pertaining to the market operations and presently functioning as the Market Operator in accordance with Rule-5 of the NEPRA Market Operator (Registration, Standards and Procedure) Rules, 2015 (the “Market Rules”).

The Company is currently performing eight major functions segregated into six core and two support functions.

The core functions include

1. Settlement
2. Power procurement on behalf of DISCOs
3. Finance
4. Legal and corporate affairs
5. Strategy and market development
6. Monitoring and coordination.

The support functions include

1. Human resource management
2. Information technology.

The CPPA-G being the Market Operator is facilitating the power market transition from the current single buyer to competitive market. While changing the market model, the overall strategy is to bring efficiency through competition in generation and retail, while transmission and distribution wire business remains regulated as they are natural monopolies. The objectives to evolve the market models are the following:

1. Search for efficiency, as the traditional model has no or insignificant incentives for reducing costs and making prudent investments
2. Facilitate the financing of the power sector, introducing dynamic and creditworthy players
3. Increased efficiency and appropriate financing ultimately should lead to lower tariffs and better service quality for end users

The main tasks performed by the company are as follows:

1. Perform the business of billing and settlement
2. Procurement of electric power on behalf of the DISCOs, including import of power from other countries. Also perform the demand aggregation function
3. Generation invoice verification on the basis of meter reading or dispatch scheduling report and terms of the respective Power Purchase Agreements
4. Billing to the DISCOs, based on the meter readings at Common Delivery Points as per the procedure defined in the Commercial Code
5. Collection from the DISCOs and settlement to the Market Participants as per the Commercial Code
6. Management of cash flow, treasury management of cash flow, treasury management and other relevant banking functions for the purposes of collection and disbursement as per the Commercial Code
7. Updating, implementing, administering and enforcing the Commercial Code in relation to the Market Rules.
8. Administering the development of and amendments to the Commercial Code for submission to NEPRA for approval.
9. Collecting information and statistics and publishing reports and information relating to the performance of the Market.
10. Operator administered market.
11. Developing and implementing competitive power markets based on policies guidelines of the Federal Government and/or requirements of NEPRA.
12. Liaising with other bodies having market functions similar to the Market Operator or administering competitive power markets.
13. Other functions as per provisions under the Commercial Code.

Notes and References

1. Web site: Towards power trading. Khaleeq. Kiani. September 7, 2015. DAWN.COM.