IPPs Seek Tariff Revision in Power Purchase Agreements

Staff Report
Islamabad: Central Power Purchasing Agency-Guaranteed (CPPA-G) and 9 bagasse-fired IPPs have sought tariff revision in power purchase agreements.

They have filed joint tariff review petitions in accordance with the revised agreements signed after tough negotiations with the Task Force on Power and subsequent approval of Federal Cabinet.

NEPRA has informed all stakeholders, interested/affected persons and the general public that it has has admitted the joint applications for reduction in tariff components filed by Central Power Purchasing Agency (Guarantee) Limited and following Independent Power Producers (IPPs) established under frame work for power Co-generation policy of Government: (i) Chiniot Power Ltd ;(ii) JDW Sugar Mills Ltd. Unit-II ;(iii) JDW Sugar Mills Ltd. Unit-III ;(iv) Al-Moiz Industries Ltd ;(v) Chanar Energy Ltd;(vi) Thal Industries Corporation Ltd ;(vii) Hamza Sugar Mills Ltd ;(viii) RYK Mills Ltd and ;(ix) Shahtaj Sugar Mills Ltd.

Salient features of the applications are as follows;(i) revision in Fuel Cost Component (FCC) of the tariff ;(ii) reduction in Working Capital Component by 50% ;(iii) fixation of Return on Equity (“RoE”) and Return on Equity during Construction (“ROEDC”) components to 17% PKR based per annum on NEPRA approved equity at CoD calculated at PKR/USD exchange rate of PKR 168/USD with no future USD indexation ;(iv) reduction in reference O&M components by 10% ;(v) revision in O&M indexation mechanism ;(vi) revision of insurance cap to 0.7% of the approved EPC cost ;and vii) allow the Company to sell electricity to Bulk Power Consumers (BPCs), as agreed between the applicants in clause 2.1 (i) of the Agreement.

The Authority has decided to conduct hearing in the matter on April 16, 2025