Nepra clarification

ISLAMABAD: Apros a story appeared in Business Recorder on October 7, 2023 titled “hydel projects in KP: KOEN accuses Nepra of delaying feasibility stage tariff,” National Electric Power Regulatory Authority (Nepra) has clarified that that the Regulator has recently admitted two project tariff petitions submitted by KA Power Limited and KOAK Power Limited for their respective projects, “Kalam Asrit” and “Asrit Kedam,” both located in Swat, Khyber Pakhtunkhwa for grant of cost plus tariff as Independent Power Producers Model.

According to Nepra, among the numerous issues presented in these tariff petitions, a critical question under evaluation of Nepra is whether the tariff for these projects should be determined under the Cost Plus regime or the Competitive Auctions regime in accordance with the Nepra (Electric Power Procurement) Regulations, 2022.

Another important issue under examination of Nepra is the IGCEP (Indicative Generation Capacity Expansion Plan) optimised parameters of least cost basis of these projects which among other is based on annualised cost of energy of US Cents 4.56/kWh for Kalam and US Cents 3.97/kWh for Kedam.

The requested costs in the tariff petitions are US$489.33 million with levelised tariff of US Cent 7.13/kWh for Kalam and US$491.29 million with levelised tariff of US Cent 7.11/kWh for Kedam.

These levelised tariffs at current SOFR and dollar exchange rate are approximately US Cent 8.88/kWh (Kalam Asrit) and US Cent 8.87/kWh (Asrit Kedam) and during debt service period of 12 years the tariff will be approximately US Cents 10.71/kWh for both projects.

At current indices, both projects will have fixed capacity payment of close to US $ 200 million per year, the majority of which around USD 193 million will be in US dollar during debt repayment period and US $ 73 million per year for remaining 18 years.

Nepra is also observing recent national debate on power sector crises including cost recovery issues, generation capacity Vs actual demand, consumer expectations and assured foreign exchange requirement for repatriation of returns.

Nepra will take decision solely on merit, transparency, the best interests of the power sector consumers and investors and long-term sustainability.

Copyright Business Recorder, 2023