AIRLINK 184.92 Decreased By ▼ -0.27 (-0.15%)
BOP 9.61 Decreased By ▼ -0.32 (-3.22%)
CNERGY 7.26 Decreased By ▼ -0.03 (-0.41%)
FCCL 36.43 Decreased By ▼ -0.21 (-0.57%)
FFL 14.34 Decreased By ▼ -0.19 (-1.31%)
FLYNG 24.28 Decreased By ▼ -0.64 (-2.57%)
HUBC 126.41 Decreased By ▼ -0.42 (-0.33%)
HUMNL 12.80 Decreased By ▼ -0.27 (-2.07%)
KEL 4.29 Decreased By ▼ -0.03 (-0.69%)
KOSM 5.94 Decreased By ▼ -0.12 (-1.98%)
MLCF 42.27 Decreased By ▼ -0.62 (-1.45%)
OGDC 198.51 Increased By ▲ 3.07 (1.57%)
PACE 6.08 Decreased By ▼ -0.21 (-3.34%)
PAEL 37.75 Decreased By ▼ -0.21 (-0.55%)
PIAHCLA 17.09 Increased By ▲ 0.19 (1.12%)
PIBTL 7.74 Decreased By ▼ -0.05 (-0.64%)
POWER 9.22 Decreased By ▼ -0.17 (-1.81%)
PPL 168.09 Increased By ▲ 0.20 (0.12%)
PRL 32.75 Decreased By ▼ -1.27 (-3.73%)
PTC 22.42 Decreased By ▼ -0.09 (-0.4%)
SEARL 101.88 Decreased By ▼ -2.09 (-2.01%)
SILK 1.07 Decreased By ▼ -0.12 (-10.08%)
SSGC 35.53 Decreased By ▼ -0.42 (-1.17%)
SYM 17.92 Decreased By ▼ -0.18 (-0.99%)
TELE 8.17 Increased By ▲ 0.15 (1.87%)
TPLP 11.70 Increased By ▲ 0.07 (0.6%)
TRG 66.12 Decreased By ▼ -0.04 (-0.06%)
WAVESAPP 11.79 Decreased By ▼ -0.34 (-2.8%)
WTL 1.53 Increased By ▲ 0.01 (0.66%)
YOUW 3.79 Decreased By ▼ -0.02 (-0.52%)
BR100 11,609 Increased By 39.9 (0.34%)
BR30 34,116 Increased By 81.8 (0.24%)
KSE100 110,323 Increased By 21.8 (0.02%)
KSE30 34,411 Increased By 24.5 (0.07%)

ISLAMABAD: K-Electric assured the National Electric Power Regulatory Authority (Nepra) on Tuesday that it would not seek any additional costs for its 220 MW hybrid project, except for a transmission cost of approximately Rs 1 per unit, in addition to a generation tariff of Rs 8.9189 per unit.

This was the key takeaway from a public hearing held at Nepra to review the Bid Evaluation Report (BER) for the 220 MW site-neutral hybrid project at Dhabeji, which was submitted by KE. During the hearing, Chairman Nepra Ch. Waseem Mukhtar, Member (Technical) Rafique Ahmad Shaikh, and Member (KP) raised several questions regarding the BER. The project is part of KE’s proposed 600 MW generation fleet.

According to the bidding process, following Nepra’s approval of the Request for Proposal (RFP) on March 15, 2024, and the NEPRA Competitive Bidding Tariff Regulations of 2017, a prequalification process was conducted as part of the technical proposal.

Dhabeji Pumping Station: Power supply timely restored: KE

This process also evaluated the prequalification status of existing applicants. Two new bidders participated in the prequalification round, with one qualifying.

The bid invitation was publicly announced on KE’s website on April 2, 2024. As per the National Competitive Bidding and Tender Regulations (NCBTR) of 2017, KE formed a Bid Evaluation Committee to oversee the bidding process, including the evaluation of bids and preparation of the evaluation report.

The KE’s renewable energy strategy includes a total capacity of 640 MW, with the 220 MW hybrid project (solar and wind) being a key part of this vision, KE officials shared during the hearing. The presentation to NEPRA revisited the project’s development since 2022, highlighting the challenges of technical bidding and the rigorous evaluation processes followed.

A major focus of the hearing was the transparency of the bidding process. This is the first time that a competitive bidding process has been carried out for such a project, attracting both local and international interest and enhancing the overall transparency and competitiveness of the process.

KE officials emphasized that the project adhered to National Competitive Bidding Regulations (NCBR), meeting all compliance requirements. The bidding process was conducted both physically and electronically to ensure fairness and accessibility. Prequalification rounds were held twice to allow greater participation.

Advertisements were placed in accordance with the NCBTR and on KE’s official platforms. Notably, no grievances were raised throughout the process, even though the project was complex, with bidders being required to provide their own land.

A significant point of discussion was whether the proposed tariff aligns with current market conditions. The KE presented a tariff of Rs 8.9 per kWh (approximately 3.08 cents), which they argued was the most competitive bid. The company conducted extensive market analysis, including consultations with Chinese EPC providers, to determine the tariff, drawing on Nepra’s past decisions.

“We based our tariff prudency check on key reference points to ensure the most competitive price,” KE representatives stated, adding that the bid reflects only power generation costs, excluding Return on Equity (ROE), in line with the principles of open competitive bidding.

The hearing also touched on energy displacement, given that hybrid renewable projects are non-dispatchable. KE provided an hourly modeling analysis using data from its own fleet, as well as inputs from NTDC’s power supply, to determine the cost reductions.

KE’s Chief Financial Officer, Aamir Ghaziani, explained that the project would replace expensive fuel-based generation, leading to significant savings. He also noted that failing to move forward with renewable energy projects could result in higher generation costs in the future, as the displacement factor would significantly reduce overall generation costs.

Additionally, representatives from Master Textiles raised concerns about the validity of the bid, as the Bid Evaluation Report for a 150 MW project was completed in December, and the bid validity expires in March. They sought clarification on the project’s timeline.

Chairman Nepra pointed out that the structure of this project is notably different from the cost-plus mechanism. Member (KP) inquired whether the transmission cost was included in the tariff and who would bear the cost of the transmission lines. The KE explained that the project would not only replace expensive generation within KE’s own network but also contribute to NTDC’s average supply, which is expected to be around 1,700 MW from the national grid.

One of the interveners, Arif Bilwani, raised a concern about the 25-year power purchase contract, questioning whether such a long-term agreement is reasonable given the rapid technological advancements in both wind and solar power generation.

For example, the benchmark for onshore wind turbines has recently increased from 1.5 MW per turbine to 5.5 MW, while solar panel efficiency has increased to at least 650-700 watts, with expectations that panels will reach 1,000 watts within a few years. Bilwani suggested that the contract term should be reduced to 15 years.

Bilwani also pointed out that, based on KE’s transmission cost estimation of Rs 0.8382 per kWh, the total tariff would rise to Rs 9.7571 per kWh.

He inquired whether the 1,700–2,000 MW supply from NTDC includes transmission costs and whether any savings would be negligible, or even negative, if NTDC’s supply costs decrease due to higher generation.

Further, KE’s tariff evaluation assumed KIBOR at 21.28% plus a 2.25% margin, despite a reduction of 1,000 basis points and an expected further decrease of 300 basis points.

Similarly, SOFR is also on a downward trajectory. Bilwani argued that if these factors were taken into account, KE’s tariff assumptions would be called into question.

He also noted that KE had assumed a Return on Equity (ROE) of 15% based on the dollar, and an Internal Rate of Return (IRR) of 13%, but the government is already revising these rates in existing agreements.

Bilwani suggested that KE’s evaluation should reflect these changes. Additionally, the use of dollar-based ROE, despite the project being financed with local equity, contradicts current government policy.

Copyright Business Recorder, 2025

Comments

200 characters