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ISLAMABAD: The Central Power Purchasing Agency Guaranteed (CPPA-G) has filed tariff adjustment applications of 22 Independent Power Producers (IPPs), baggasse Co. Gen IPPs and wind power projects which recently signed agreements with the government but are facing a NAB investigation.

National Electric Power Regulatory Authority (Nepra) will be hearing the applications on March 3, 2021 wherein it will also unveil process fee to be recovered from the power projects. A total of 47 IPPs have signed agreements with the government.

The following 12 IPPs established under the Power Generation Policy 2002 are under strict scrutiny, and have also filed applications for adjustments in components of tariffs: (i) Atlas Power;(ii) Attock Gen Limited ;(iii) Engro Powergen Qadirpur Limited;(iv) Foundation Power Company (Daharki) Limited ;(v) Halmore Power Generation Company Limited ;(vi) Liberty Power Tech Limited ;(vii) Narowal Energy Limited ;(viii) Nishat Chunian Limited ;(ix) Nishat Power Limited ;(x) Orient Power Company Limited ;(xi) Saif Power Limited and ;(xii) Sapphire Electric Power Limited.

CPPA-G requested a change in the existing RoE and RoEDC components of tariff computed @ 15 per cent return with dollar indexation at 12 per cent in case of foreign equity investment and 17 per cent with exchange rate fixed at Rs 148/$ with no further indexation in case of local equity investment. CPPA-G also proposed the pass-through withholding tax on dividend to be calculated in accordance with the adjusted RoE and RoEDC components.

According to the application, the following baggasse Co-Gen IPPs have sought adjustment in component of tariff pursuant to agreements entered CPPA-G; (i) Al-Moiz Industries Limited; (ii) Chanar Energy Limited ;(iii) Hamza Sugar Mills Limited; (iv) JWD Sugar Mills Limited (Unit-II); (v) JWD Sugar Mills Limited (Unit-III); (vi) RYK Mills Limited and; (vii) Thal Industries Corporation Limited.

CPPA-G in its application has sought the following adjustments in tariff: (i) reduction in the Return on Equity component from 17 percent USD based per annum to twelve percent USD based per annum, from the date of signing of the Master Agreement for the next five years, on the NEPRA-approved equity at Commercial Operation Date. Subsequently, the RoE shall be changed to 17 per cent Rupee-based per annum on the Nepra-approved equity at COD calculated at Rs 168/ USD, with no USD indexation throughout the remaining term; (ii) reduce O&M by 10 per cent; (iii) reduce insurance to 0.7 per cent of ECP cost provided that other terms and conditions of the insurance adjustment mechanism provided in the EPA shall remain the same ;(iv)approval of the tariff adjustment to become effective as provided in clause 2.2, clause 2.3-and Annex B of the Master Agreement and notified accordingly and ;(v) in pursuance to clause 3.1.2of the EPA Amendment, if the Company operates above the annual forty-five percent (45%) plant factor in an agreement year, the applicant shall pay one hundred percent of the variable energy purchase price and thirty percent of the fixed energy purchase-price for energy produced beyond forty five percent plant factor. If the Company operates below the average plant factor in an agreement year, the difference between the average plant factor and actual plant factor shall be treated as "shortfall energy" and carried forward to the following years. In case the company operates above the average plant factor in subsequent years, the purchaser shall pay one hundred percent of the variable energy purchase price, and to the extent of energy delivered beyond the average plant factor to the extent of "shortfall energy” occurring in the preceding year thirty percent of the fixed energy purchase price excluding debt service component and one hundred percent of the debt service component. Both the arrangements shall remain effective for five-year periods starting from the Commercial Operations Date, after which a fresh reset shall be done to-re-start the new five year period.

For three wind projects Act Wind (Pvt.) Ltd, Artistic Energy (Pvt.) Ltd and FFC Energy

CPPA-G has sought the following adjustments in the tariff pursuant, to be Master Agreement signed by and between he Applicant and he Company on February 12, 2021; (i) reduction in the Return on Equity component to 13% per annum; (ii) reduction in the Operations and Maintenance component by 20% as per. clause 4 of the Master Agreement; (iii) a reduction in the cap for the amount of the insurance during operations to seven tenths of one percent (0.7%) of the EPC cost as per clause 4 of the Master Agreement; (iv) provision for future reduction in the debt component upon the successful conclusion of debt renegotiations with the company's Lenders; and (v) approval of the tariff adjustment to become effective as provided in clause 2.2, clause 2.3 and Annex B of the Master Agreement and notified accordingly.

Copyright Business Recorder, 2021