Pakistan's Nepra revises tariff for wind power project

ISLAMABAD — As the energy crisis further worsens, Pakistan's the National Electric Power Regulatory Authority (Nepra) has revised tariff for a wind power project by allowing about ten per cent increase through a divided decision.

By A Correspondent

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Published: Wed 18 Jul 2007, 9:09 AM

Last updated: Sat 4 Apr 2015, 10:21 PM

Informed sources said there was growing sense among the Nepra and the government officials that non-development of sufficient power generating capacity in the eight years or so was resulting in an emergency situation was now forcing the government to accept reasonably higher rates.

A member of the Nepra Abdul Rahim Khan in his dissenting remarks has also called for the need to review the priority of induction of various technologies for urgent acquisition of firm generating capacity during 2007 to 2010.

Additional Capacity

A senior Nepra official said that the government was now according highest priority to ensure capacity addition at all costs with the growing gap between demand and supply. He said the Nepra approved the revised higher tariff for Win Power Limited through a unusual 2-1 majority vote. The Nepra comprises five members including a chairman. A member who is away on a foreign trip could not become part of the decision while the post of member Sindh is lying vacant for more than 15 months.

The wind project of Win Power Limited (WPL) to be set up near Karachi would now cost 10.5 US cents per unit, instead of cost 9.5 US cents per unit levelized tariff approved in the last week of April to the Wapdas National Transmission and Dispatch Company, compared with 4.7 cents per unit of hydel projects that currently face resistance.

The revised tariff would now be almost 13 cents (about Rs8 per unit) for first ten years and 3.9 cents (Rs2.4) for the next years. As such, the levelised tariff or 20 years of the project would now come to 10.5 cents. After allowing carbon reduction emission credits, the sponsor would get a total of about 11.2 cents per unit. The earlier tariff was 11.75 cents (about Rs7.05 per unit), for the first 10 years and 3.7 cents (Rs2.2) per unit for the next 10 years, resulting a levelised tariff of 9.5 cents for 20 years of the project life.

Tariff increase

A senior member of the three-member Nepra Abdul Rahim Khan, therefore, opposed the tariff increase by writing a separate decision. He said the earlier determination had been reached by allowing each item of cost. No substantial change in the above assessment is expected within a short interval since the determination of April 27, 2007, he said. The incentive of increase in tariff by one cent per kWh in addition to the allowed tariff can translate into increasing the return on equity from 15 per cent to 22 per cent and the incentive may be in variance with the Policy of the Federal Government in this context, said Rahim. He said the project cost per kilowatt for wind power projects of more than $1900 of installed capacity has reached a level where it surpasses the threshold of project per kW for run of the river hydroelectric project which are equally desirable renewable energy projects. Moreover the pressing problem of inadequate generating capacity to meet peak demand has to be met through sources providing firm generating capability in the peak during years 2007 to 2010, he said and called for reviewing the priority

of induction of various technologies for the urgent acquisition of firm generating capacity during 2007-2010.

He said that the original Nepra order should be maintained but if the objective was to consider engineering, procurement and construction on the basis of firm (non-reopenable) competitive price, Win Power be asked to provide the firm price supported by evidence of a credible and cogent process of competitive procurement carried out by the sponsor. He also demanded that the Alternate Energy Development Board (AEDB) should verify the revised feasibility study of the wind turbine because the model and make of the turbine had also been changed.

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