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ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has reduced Return on Equity (RoE) and Return on Equity During Construction (RoEDC) components of 12 thermal power plants having cumulative net capacity of 2,412 MW established under Power Generation Policy 2002.

The reduction in tariff will result in estimated saving of Rs. 182 billion over the remaining life of the projects. Power Division will submit the decisions of Nepra, first before the Economic Coordination Committee (ECC) of the Cabinet and then before the Cabinet for final nod before making payments according to the revised PPAs.

The twelve thermal power projects whose RoE and RoEDC have been revised are as follows ;(i) Engro Powergen Qadirpur Limited (EPQL); (ii) Attock Gen Ltd (AGL); (iii) Orient Power Company (Pvt) Ltd (OPCL); (iv) Saif Power Ltd. (SPL);(V) Sapphire Electric Company Ltd (SECL); (vi) Halmore Power Generation Company Ltd. (HPGCL); (vii) Liberty Power Tech Ltd (LPTL); (viii) Foundation Power Company Daharki Ltd (FPCDL); (ix) Narowal Energy Ltd (NEL); (x) Atlas Power Ltd (APL); (xi) Nishat Chunian Power Ltd (NCPL) and; (xii) Nishat Power Ltd (NPL).

National Accountability Bureau (NAB) is already investigating “alleged” violations by some of the projects established under 2002 policy.

According to Nepra, Central Power Generation Agency (CPPA-G) filed tariff adjustment applications for reduction in RoE and RoEDC components of twelve thermal power plants. CPPA-G requested to revise RoE and RoEDC components on the basis of 17% return and fixed exchange rate of Rs. 148/$ without dollar indexation for local equity, and revised RoE and RoEDC components on the basis of 12% return with dollar indexation for foreign equity.

On the basis of equity investment of $ 45.89 million, outstanding RoEDC of $ 6.81 million, return on equity of 17% and exchange rate of Rs. 148/US$, the revised RoE and RoEDC components of Nishat Power worked out at Rs. 0.6749/kWh and Rs. 0.11331/kWh respectively and the same are being approved. The revised tariff components shall not be subject to $ indexation.

Nishat Chunian - on the basis of equity investment of $ 47.48 million, outstanding RoEDC of $ 7.75 million, return on equity of 17% and exchange rate of Rs. 148/US$, the revised RoE and RoEDC components woks out at Rs. 0.69681kWh and Rs. 0.12841/kWh respectively and the same are being approved. The revised tariff components shall not be subject to US$ indexation.

Atlas Power - on the basis of equity investment of $ 63.85 million, outstanding RoEDC of $ 5.79 million, return of 17% and exchange rate of Rs. 1481 $, the revised RoE and RoEDC components woks out at Rs. 0.85751/kWh and Rs. 0.08891/kWh respectively and the same are being approved.

The revised tariff components shall not be subject to $ indexation Narowal Energy Ltd on the basis of equity investment of $ 80.05 million, outstanding RoEDC of $ 14.26 million, return on equity of 17% and exchange rate of Rs. I48/$, the revised RoE and RoEDC components woks out as Rs. 1.07531/kWh and Rs. 0.21321/kWh respectively and the same are being approved. The revised tariff components shall not be subject to $ indexation.

Foundation Power Limited - on the basis of equity investment of $ 53.02 million, return on equity of 10.86% and reference exchange rate of Rs. 83.31 $, the revised RoE and RoEDC components works out at Rs. 0.30411kWh and Rs. 0.05581kWh respectively and the same are being approved. The revised tariff components shall be quarterly adjusted on account of variation in Rupee-Dollar parity as per the existing indexation mechanism.

Liberty Power Limited - On the basis of equity investment of $ 60.06 million, outstanding RoEDC of $ 8.26 million, return on equity of 17% and exchange rate of Rs. 148/$, the revised RoE and RoEDC components woks out at Rs. 0.87951kW/h and Rs. 0.13541kWh respectively and the same are being approved.

The revised tariff components shall not be subject to $ indexation. Halomore Power - on the basis of equity investment of $ 60.05 million, outstanding RoEDC of $ 27.25 million, return of 12% and reference exchange rate of Rs. 85.9/$, the revised RoE and RoEDC components works out at Rs. 0.3381 1kWh and Rs. 0.1718/kWh respectively and the same are being approved. The revised tariff components shall be quarterly adjusted on account of variation in Rupee-Dollar parity as per the existing indexation mechanism.

Sapphire Electric Company - on the basis of equity investment of $ 58.91 million, outstanding RoEDC of $ 14.66 million, return on local equity of 17%, return on foreign equity of 12%, exchange rate of Rs. 148/$ for local equity and reference exchange rate of Rs. 83.35/$ for foreign equity.

Saif Power - on the basis of equity investment of $ 55.77 million, outstanding RoEDC of $ 15.24 million, return on local equity of 17%, return on foreign equity of 12%, exchange rate of Rs. 148/$ for local equity and reference exchange rate of Rs. 84/$ for foreign equity, the revised approved ROE and ROEDC components along with indexations of RoE on local equity will be Rs 0.6332 kWh and RoEDC Rs 0.1829 per unit and on foreign equity RoE Rs 0.0523 per unit and RoEDC, Rs 0.0 163 per unit.

Orient Power Limited- on the basis of equity investment of $ 61.17 million, outstanding RoEDC of $ 11.36 million, return on local equity of 17%, return on foreign equity of 12%, exchange rate of Rs. 148/ $ for local equity and reference exchange rate of Rs. 80.5/ $ for foreign equity, the revised approved RoE and RoEDC components along with indexations are local equity RoE- Rs 0.2388/kWh, ROEDC, Rs 0.0469/ kWh and foreign equity RoE Rs 0. 2254/kWh and RoEDC, Rs 0. 0.0476/kWh.

Attock Gen. on the basis of equity investment of $ 39.56 million, outstanding RoEDC of $ 4.81 million, return on local equity of 17%, return on foreign equity of 12%, exchange rate of Rs. 148/$ for local equity and reference exchange rate of Rs. 80.4/$ for foreign equity, the revised approved RoE and RoEDC components along with indexations are local equity - RoE Rs 0.2546/kWh, ROEDC, Rs0.0.0360/kWh and foreign equity, RoE, Rs 0.1813/kWh and RoEDC, Rs 0. 0.0291/kWh.

Engro Powergen Qadirpur - on the basis of equity investment of $ 51.82 million, outstanding RoEDC of $ 16.17 million, return on equity of 17% and exchange rate of Rs. 148/$, the revised RoE and RoEDC components woks out Rs. 0.68491/kWh and Rs. 0.24301/kWh respectively on gas and the same is being approved.

The Power Division has already decided to share NAB’s letter written in response to a letter of Power Division of March 18, 2021, with the ECC and Cabinet after receiving comments from Ministries of Law and Justice and Finance. NAB argues that execution of contracts is the prerogative of the Government as the pacts do not fall under its purview.

Copyright Business Recorder, 2021

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