National Electric Power Regulatory Authority (Nepra) has decided to re-determine tariff for upcoming Thar-coal power projects as the duration for upfront tariff has expired.
“Upfront tariff for Thar coal power projects has expired and now Nepra has to decide whether it will continue the upfront tariff or will opt for bidding for new projects. Nepra has convened stakeholders” meeting for a discussion on future strategy on Friday,” said one of the stakeholders.
Nepra has fixed March 28, 2017 for public hearing in Islamabad to seek proposals from stakeholders for re-determination of tariff for upcoming Thar coal power projects. The Authority has initiated sou moto proceedings for the development of new tariff for Thar Coal Based Power Projects on January 13, 2017 by advertisement along with certain issues in leading national newspapers seeking comments of the stakeholders, Interested/ Affected persons and the general public. Individual letters were also sent to all concerned.
There were unconfirmed reports that Nepra is considering reducing Return on Equity (RoE) to 13 per cent for upcoming Thar coal power projects but officials claim that the Authority has not even considered rationalising RoE. According to Nepra, keeping in view the comments of stakeholders, it has decided to hold a hearing in the matter. The following issues have been framed for the hearing:
(i) Whether the Authority should determine another upfront tariff with revised benchmarks keeping in view the improvements in technology and reduced risks, as the investors have already borne the first movers risks? (ii) Whether the Authority should determine the benchmark tariff of competitive bidding under Competitive Bidding Tariff (Approval Procedure) Regulations, 2014 for new power projects on Thar coal? (iii) If new tariff is determined under either upfront or competitive regime whether the cost-plus regime option should be available? (iv) Whether only such coal power plants may be allowed which have low cooling water requirement for future power generation at Thar? (v) What shall be the reasonable Internal Rate of Return (IRR) on equity for future Thar coal power projects keeping in view the reduced risks? (vi) What shall be the appropriate thermal efficiency levels for future Thar coal power projects? (vii) Whether the construction period of 40 months and 48 months for 330MW and 660MW/1099MW projects respectively, is reasonable? and (viii) Whether other operating costs as given in the previous Upfront Thar Tariff should be reduced?
When contacted CEO, Sindh Engro Coal Mining Company (SECMC), Engro Powergen Ltd (EPL), Engro Powergen Thar Ltd (EPTL) Shamsuddin Ahmed Shaikh who was in China said that Nepra has fully supported the development of Thar coal. “We will work with Nepra whatever their decision ie extension of upfront tariff or bidding,” he added.