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ISLAMABAD: National Electric Power Regulatory Authority (Nepra) on Friday reduced Return on Equity (RoE), Return on Equity during Construction (RoEDC), Operation & Maintenance (O&M) and insurance components of 12 more power projects, which will result in an estimated saving of Rs 150 billion over the term of these projects.

Of these, 12 power projects have already signed revised agreements with the Federal Government, seven bagasse, three wind and two solar PV Independent Power Producers (IPPs) having cumulative capacity of around 355MW.

The names of power projects whose RoE and RoEDC have been reduced from 17 to 12 percent, O&M by 10 percent and insurance from 1 percent to 0.7 percent are as follows: (i) JDW-II, 26.35MW; (ii) JWD-III, 26.35MW; (iii) Rahimyar Khan Mills Limited (RKML), 30MW; (iv) Hamza Sugar Mills Limited, 15MW; (v) Thal Industries Corporation Limited (TICL), 41MW; (vi) Al-Moiz Industries Limited, 36MW; and (vii) Chanar Energy Limited Limited, 22MW.

The names of three wind power projects whose RoE and RoEDC have been slashed from 17 percent to 13 percent, O&M by 20 percent and insurance from 1 percent to 0.7 percent are as follows: FFC Energy Limited (FFCEL) 49.5MW, Act Wind Power Limited 30MW and Artistic 49.3MW.

The RoE and ROEDC of AJ Power Private Limited (AJPPL) 12MW and Harappa Solar Limited 18MW have been reduced from 17 percent to 13 percent, O&M by 15 percent and insurance from 1 percent to 0.7 percent.

The tariff share of these IPPs, for energy generation beyond their respective annual plant factors, has also been reduced. The reduction in tariff will result in estimated savings of around Rs150 billion over the remaining life of the projects.

The Authority under the prevailing rules and regulations admitted the applications submitted by Central Power Purchasing Agency (CPPA-G) for tariff adjustments of these plants and subsequently conducted hearings in the matter on March 03, 2021. After detailed deliberations, the Authority finalized their decision to revise the tariff components of these power plants. These savings are in addition to the recent tariff reduction of 12 thermal power plants estimated to save Rs 182 billion over the remaining life of the projects. So, total saving including these and earlier determination of the 12 thermal power plants is of around Rs 332 billion.

The revised agreements of these 12 projects are under probe at the National Accountability Bureau (NAB) and the Power Division has already made it clear that it will not release agreed amount to the power projects until a clear chit is received from the anti-graft body.

However, NAB, in its letter, has conveyed to Power Division that it has nothing to do with the agreements as these do not fall within the ambit and purview of Section 9 of the National Accountability Ordinance (NAO), 1999 but in the jurisdictional domain of the Power Division.

Any delay in payments to IPPs is a default by government and will further exacerbate circular debt as the government will have to pay late payment interest on all the amounts not paid.

The IMF has urged the government to pay Rs 180 billion (40 percent of Rs 403 billion agreed amount) to the IPPs by end May 2021. It has been argued that a NAB case can be registered even if they write categorically that Power Division can make the payments as their work is related to criminal investigation and not civil decision making.

Copyright Business Recorder, 2021

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