The National Electric Power Regulatory Authority (Nepra) has determined levellised tariff of Rs 0.3978 per unit for double circuit transmission line project from Sindh Nooriabad power projects (SNPCL-I & SNPCL-II) to K-Electric grid station. The reference tariff approved in a review motion for Sindh Transmission and Dispatch Company (Private) Ltd. (ST&DCPL) is based on availability factor of 100% with 1.5% non-penalized maintenance outages and for 25 years commencing from the Commercial Operation Date (CoD).
The tariff which has been calculated on the basis of Build Own and Operate (BOO) will have four components i.e. O&M, insurance, debt servicing and Return on Equity (RoE). The tariff granted for O&M will be Rs 0.1411 per unit, insurance Rs 0.0192 per unit, debt serving Rs 0.1440 per unit and RoE Rs 0.0935 per unit. The cumulative capacity of 101.06 MW of SNPCL-I and SNPCL-II has been used to work out tariff. Upon introduction of new capacity, the tariff components shall be modified on filing of tariff modification petition by ST&DCL.
The petitioner in a review motion submitted that the Authority in the tariff determination has allowed EPC cost as Rs 1.6438 billion against the claimed cost of Rs 1.823 billion. The Authority in the tariff determination had allowed Rs 1.6438 billion on account of EPC cost comprising of Rs 91.065 million on account of variation due to new items and Rs 277.716 million on account of variation in BOQ items. However, the variation of Rs 179.633 million in the original BOQs of 85 km transmission line was disallowed.
The Authority also noted that the procurement process adopted for selection of EPC contractor M/s Technomen Kinetics (Pvt) Limited was deficient on various aspects. Accordingly, the Authority at the time of tariff determination had decided to seek views of SPPRA through its letter of October 28, 2016.
The Authority again observed that procurement process was deficient in various aspects and thus cannot be fully relied upon in assessing the prudent cost as being claimed therein. Accordingly pursuant to prudency assessment as per NEPRA (Tariff Standards and Procedure) Rules, 1998 and considering the review motion request, the Authority gave the Petitioner an opportunity to evaluate comparatively the claimed cost of this transmission line with other similar 132 kV transmission costs for various standardized BOQ items.
In the absence of documentary evidence from the Petitioner, the Authority itself carried out the comparison of various standard BOQ items of 132 kV transmission line with the information available from DISCOs. It was again observed that the claimed cost by the Petitioner is significantly higher even for standardized items when comparing the same with the transmission and distribution lines of the Discos and NTDCL. Similarly, the inclusion of variations and addition of new items exposed the project cost to further escalate in comparison to similar costs of other transmission lines.
The Authority therefore after deliberations considered that the EPC cost of Rs 1.6438 billion, which has been already allowed in the tariff determination, as certainly adequate and reasonable for 132 kV transmission length of 95 km. This cost was allowed after considering factors specific to this first transmission line venture being carried out by the petitioner.
ST&DCPL had claimed an annual cost of Rs 190.05 million as O&M cost in the tariff petition. The Authority after comparing the same with the expenses trend on similar 132 kv transmission lines in other entities had allowed O&M cost of Rs 124.934 million.
The Authority noted that comparison of 660KV HVDC 878 km line with a 132kV HVAC Transmission Line of 98 km is not appropriate as the losses allowed in above referred HVDC project include the losses allowed for the converter station. For ST&DCPL 132kV transmission line project, however, there is no converter station involved. The Authority also observed that ST&DCPL has claimed 3% transmission losses for 98.5 km dedicated transmission line whereas the maximum limit of losses of 3% has been set by the Authority for the whole transmission system network of NTDCL.
The Authority noted that although the average real time losses are higher than the allowed limits, it reiterates that operational inefficiencies shall not be allowed to pass on to the end consumers. In the instant case it is the responsibility of both K-Electric and the generation facility (SNPCL) to maintain the voltages at their respective ends within the allowed limits so that un-due losses are not attributed to ST&DCPL.
After going through the claims of the petitioner and available facts, it has approved that debt service shall be paid in the first 10 years of commercial operation of the project. Debt repayment schedule has been worked out using six months KIBOR (6.12%) + spread (2.75%). Debt to Equity ratio has been assumed to be 70:30. Discount factor of 10% has been used to compute the levellised tariff. A 15% Return on Equity during construction and operation has been allowed. Construction period of seven months has been considered for the workings of ROEDC and IDC. Insurance during Operation has been calculated as 1.00% of the allowed EPC cost.