Centre irked by Punjab delaying lower tariff for LNG plants – Pakistan

Islamabad: The Federal Government has transmitted its disgust to the Punjab government for the delay in the approval process for the reduction of rates of its two LNG -based electric power plants of more than 2,400MW, which implies savings of approximately 600 billion dollars during their remaining useful lives from 18 to 23 years.

A senior official told him Sunrise That central energy purchase agency (CPPA), a subsidiary of the Energy Division, had been in contact with the Punjab Energy Department to complete the formalities to present rates reduction applications before the National Electric Power Regulatory Authority (NEPRA).

He said that CPPA’s Management to the Government that the case for the approval of the tariffs reviewed with the two Punjab plants was included in the provincial cabinet agenda long before Eidul Fitr. “The CPPA has reported that the approval of the Punjab cabinet has not arrived as April 25, despite the reminders,” said the official.

The two LNG plants of the Punjab government in Bhikki and Trimmu are among the most efficient plants with plant efficiency beyond 61 percent. The 1.180MW Bhikki plant had come into operation in 2018 and its remaining 18 -year period expires in 2043, while the 1,262MW Trimmu plant that began commercial operations in May 2023 can continue to operate until 2048.

Federal Government waiting for approval to present tariff reduction supplications

The official said that the power division and prime minister’s office had transmitted his disgust to the CPPA for the in -progressive delays and had also addressed the provincial government for early authorization.

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He said that the working group on energy producers had completed the terms reviewed with the four LNG -based plants, two floors that belong to federal and provincial governments each, approximately two months ago.

The center had not only secured the federal approvals of the Cabinet, but also presented requests for reducing fees against Nepra that they had already conducted public hearing last week. The federal government expected the regulatory process for the four similar plants to end simultaneously, if not together. However, provincial approvals are not yet available.

The sources said that the combined savings of Bhikki and Trimmu were estimated at approximately RS596 billion during their remaining useful life of 18 and 23 years, respectively. The change in the terms of its contracts included a “hybrid and payment model instead of the existing model of ‘carrying or paying’, reduction in the rate of yield and an indexing limit in dollars in RS168.

The Government claims a total of RS2.162 billion savings of six electrical plants owned by the government that also include two previous projects of the provincial government. It affirms the savings of RS1.567TR of four federal projects with a cumulative capacity of approximately 3,700MW, two projects based on LNG in Balloki and Haveli Bahadurshah of around 1,220mw each, 747MW Guddu Power Project and 510MW Nandipur Power Project.

After the agreements reviewed by the working group, Nepria announced that it had decided to suspend the dollar -based indexations for these plants, instead moving to the indexations based on rupees set throughout the useful life of energy projects.

“This strategic review aims to stop exposure to currency change and reduce tariff volatility for consumers,” he said, added that he also limited the indexation of operations and maintenance (O & m) costs at 70pc of devaluation of rupees, below the previous 100 percent.

In addition, the return of the equity structure (ROE) has been rationalized and the plants will now receive 35pc of the ROE as fixed, with the remaining 65pc directly linked to the real operation of the plant.

The reviewed O & M will be indexed quarterly.

According to the agreement, the applicants agreed to implement a “hybrid model of taking and payment”, for which the payment of rates to the company will be made by the CPPA as follows: “As of the date of effective validity, previously prior to the remaining period of the current year, and from then on for each year, the company will be entitled to 35pc of the Revised Components of the ROE of the ROE of the Tarifa of the Tarif.

From the date of validity, in the event that the net electrical output sent and delivered (NEO) of the company exceeds 35 % of the capacity of the total contract in terms of KWH, the company will have the right to receive ROE components of the rate, which will be calculated in the real neo that exceeds 35pc of the capacity of the total contract in terms of KWH and the company will claim the differential CPP of agreement.

The Government claims on the RS3.5TR savings through energy purchase agreements reviewed with 29 IPP and GPP on the remaining useful life.

Posted in Dawn, April 28, 2025