Islamabad: The Government has formally asked the National Regulatory Authority of Electric Power (NEPRA) that allows a reduction in the energy purchase rates of four power plants of the public sector, which implies around RS1.58 billion savings on its remaining sections remaining under revised agreements.
The application implies a change in terms of contracts to ‘take or pay’ to a model of ‘taking and hybrid payment’, a reduction in the rate of yield and an indexing limit in dollars in RS168.
NEPRA has scheduled a public hearing on April 24 to deliberate on the proposal submitted jointly by the four energy plants owned by the Government (GPPS) and the central energy purchase agency (CPPA), an entity of the Power division.
These four power plants, with a cumulative capacity of approximately 3,700 MW, include two BLLOKI -based projects in Balloki and Haveli Bahadur Shah of around 1,220 MW each (with a combined savings of RS1.1tr), and the Energy Plant of 747 MW Guddu and the 510 MW Nandipur Energy project RS35555). The four are owned by the federal government.
RS3.5tr expected savings in general, since the Government seeks to amend agreements of 29 electricity producers
Total savings because of the four projects reach approximately RS1.6tr in terms of capacity positions, operation and maintenance costs, etc.
Formalities were being completed to add two similar LNG projects of the Punjab government in Bhikki and Trimmu, which would add public sector savings so far to RS2.16TR, said an official.
In their joint requests, the CPPA and the GPPs have reported that the negotiated settlement agreements (NSA) were signed on April 8, after the formal agreement of the federal cabinet on March 19 to reduce the end of consumption rates and relieve the general public loading through a “take and hybrid payment model”.
The applicants requested that Neprol renounce the applicable tariff rates, citing the national interest and the benefit of the consumer. According to the NSA, the key tariff components will be restructured, including the indexing of operations and maintenance (O & M).
O & M reviewed costs will be indexed quarterly. Local and variable components will be adjusted to the lowest of five percent annual or the average consumer price index (CPI) real average for the previous 12 months.
For the strange components and fixed variables, the current indexing mechanism will continue; However, the depreciation of the rupee against the US dollar will be taken into account in just 70 % of the real annual depreciation. In contrast, any appreciation in the value of rupee will be completely transmitted to consumers.
The return component on the heritage (ROE) will be redeemed at a rate of 13 pieces to the fixed exchange rate of RS168 per dollar based on the quarterly indexation of nephera determined for the period from October to December 2024 as a revised reference. From then on, there will be no exchange rate indexation.
From the effective implementation date, the capacity insurance component of capacity purchase (CPP) will be discussed as a transfer article, limited to 0.8pc of the sum secured under the energy purchase agreements.
According to the NSA, the applicants agreed to implement a “hybrid model of taking and payment”, so that the payment of rates to the company will be made by the CPPA as follows: from the effective date, previously prior to the remaining period of the current year, and start from then on each year, the company will be entitled to 35pc of the Revised ROE components of the Rate of the Tariff of the Tariff.
From the date of validity, in the event that the net electrical production sent and delivered (neo) of the company exceeds 35 % of the capacity of the total contract in terms of kilowatts-Hora (KWh), then the company will have the right to receive components of ROE of the rate, which will be calculated in the real neo, exceeds 35pc of the total contract capacity in terms of KWh and the company’s claim company.
These reviews are part of the restructuring energy purchase agreements (PPA) that involve 29 independent energy producers (IPP) and government -owned plants.
According to the Energy Division, these renegotiated terms are expected to generate total RS3.5TR savings during contract periods that go from three to 20 years, depending on the commercial operation date of each project.
Posted in Dawn, April 19, 2025
