In a bid to control the increasing per unit power prices and ongoing electricity crisis in the country, the National Electric Power Regulatory Authority (Nepra) has determined upfront tariff for coal-based power plants which however would be effective only after getting final opinion from the stakeholders.

In accordance with a draft notification of Nepra available with TheNation, following the receiving of proposal from Private Power Infrastructure Board (PPIB) for determination of upfront tariff for power generating facilities based on imported as well as local coal other than Thar coal, an upfront and unified tariff has been determined first time in the history of country. Tariff over local financing has been determined, as Rs7.05/unit while over foreign financing Rs8.12/unit has been set as an upfront tariff, which in accordance to NEPRA is to control increasing electricity crisis and per unit power price.

However, this determined upfront tariff would not be applicable for the Thar coalUpfront tariff means a tariff developed, declared, determined, or approved by the authority (NEPRA) on a petition moved by any relevant agency or in exercise of suo-moto powers by the authority.

Official documents also made it very clear that the tariff for coal based generation facility would be effective for a minimum period of thirty years and the companies involved in coal based power generation business in the country would get unified tariff for next 6 years. And, after passing the said span of time, NEPRA would review the tariff. However, Thar coal having altogether different issues including one of the most critical issue of water availability would be dealt with separately under separate regulations. The upfront tariff shall be for brand new machinery only. This upfront tariff would be applicable for the plants of 200MW, 600MW and 1000MW.

About losses on transportation of coal, the regulatory authority in its draft notification said that ‘ the power producer will be allowed losses on transportation of imported coal up to 2 per cent on local, whereas on local coal these losses will be allowed up to 1 per cent’.“If the Coal Supply Agreement caters for the transportation losses in the price, there will be no adjustment in coal pricing on account of transportation losses,” notification reads.

The capital cost for coal based power projects having net capacity of 200MW has been determined as $212.4 million, while for 600MW $585.0 million and for 1000MW and above the capital cost has been determined at $885.0 million. However, fluctuations in the price of steel and machinery of electricity would be adjusted under head wholesale price index and fluctuations in the price of coal would also be adjusted under tariff mechanism.
It merits mentioning here that construction period for the generation facility having capacity up to 200MW would be 40 months while construction period for the generation facility having capacity of 600MW and above would be 48 months.

The sponsor of the project can arrange foreign financing in US$, British Pound, Sterling, Euro and Japanese Yen or in any currency as the Government of Pakistan may allow. The upfront tariff has been determined based on the debt equity ratio of 75:25. ‘The minimum equity shall be 20 per cent and the maximum equity shall be 30 per cent; if the equity actually developed is more than 30 per cent of the capital cost, equity in excess of 30 per cent shall be treated as loan. The equity invested in foreign currency shall be designated in Pak rupees on the date of each investment’.

Besides all this, financing fee and charges are taken at 3 per cent of the borrowing to cater for the upfront fee, commitment fee, lenders’ technical, financial and legal consultant’s fee etc. Cost of opening of letters of credit in respect of first import of coal will be capitalized.