ISLAMABAD: The four Government Power Plants (GPPs) have sought NEPRA’s approval for revision of their existing “Take or Pay” mechanism with Hybrid Take and Pay Model which will ensure savings of Rs 2.162 trillion over the remaining life of these projects.
The power projects are, Balloki Power Plant (NPPMCL), Haveli Bahadar Shah(NPPMCL), 747 MW Guddu Power Plants and 525 MW Nandipure Power Plant.
According to CPPA-G, cumulative reduction in future capacity payments and related obligations, as a result of negotiations are Rs 354 billion from GENCOs (Nandipure and Guddu) and Rs 1.808 trillion from Haveli Bahadar Shah, Balloki and QATPL plants and Rs 498 billion from PTPL.
The impact of Negotiated Settlement Agreements (NSAs) and tariff reduction will be passed to the consumers after approval of tariff modification by NEPRA, which is scheduled to hold a public hearing on April 24, 2025.
According to the joint applications filed by the GPPs and CPPA-G, both have entered into the NSA. Pursuant to Clause 2.2(a) of the NSA, the applicants have agreed to adjust the components of tariff as per the following terms and conditions: (a) indexation of Operation & Maintenance Components Operation & Maintenance Components (the “O&M”) shall be revised as follows ;(i) fixed O&M shall be paid at the rate of Rs. 0.4677 / kWh; and (ii) Variable O&M shall be paid at the rate of *Rs. 0.4438 / kW/h. These figures will be updated on the basis of NEPRA determination of February 03, 2025, March 27, 2025 and NEPRA’s determination to be announced on application of NFPMCL for indexation of tariff. The revised O&M shall be indexed quarterly as per the following indexation mechanism: (i). Fixed O&M – Local and Variable O&M – Local shall be indexed with lower of (a) five percent (5%) per annum or (b) the actual average National Consumer Price Index (CPI) for the preceding twelve months ( ii) fixed O&M – Foreign and Variable O&M – Foreign shall be indexed as per the existing mechanism provided that the Rs / USD depreciation shall be allowed only to the extent of 70% of the actual depreciation per annum. In case, the PKR appreciates against the USD in a year, then 100% of such appreciation shall be passed on to the consumers. For clarification, the indices used in the quarterly indexation determined by NEPRA for the period Oct-Dec. 2024 shall prevail. RoE component from the effective Date and onwards, the RoE component shall be re-determined to 13% rate of return, at the fixed exchange rate of Rs 168 / USD based on NEPRA’s determined Quarterly indexation for the period Oct- Dec 2024 as revised reference. Thereafter, there shall be no exchange rate indexation.
These figures will be updated on the basis of NEPRA determination dated February 03, 2025, March 27, 2025 and NEPRA’s determination to be announced on application of NPPMCL for indexation of tariff.
Insurance Component: from the effective date, the Insurance Component of CPP shall be pass through Item subject to a maximum limit to be capped at 0.8% of sum insured as per the provision of PPA.
Hybrid Take and Pay Model As per clause 2.2 (a)(i) of the NSA, : the Applicants agreed to implement a ‘Hybrid Take-and-Pay Model’, whereby tariff payment to the Company shall be made by the Power Purchaser as follows “ from the effective date, prorated for remaining period of the current agreement year, and thereafter for every Agreement year, the Company will be entitled to thirty-five percent (35%) of revised RoE components of tariff as part of CPP, which will be computed as per the terms of the existing PPA. From the Effective Date, in case the despatched and delivered Net Electrical Output (NEO) of the Company exceeds thirty-five percent (35%) of the total Contract Capacity in terms of kWh, then the Company will i be entitled to receive RoE components of tariff, which shall be calculated on the actual NEO exceeding thirty-five percent (35%) of the total Contract Capacity in terms of kWh and the Company shall claim the differential CPP accordingly.
In light of the foregoing submissions, CPPA-G and GPPs have requested NEPRA to: (a) accept their applications; (b) revise indexation mechanism of the O&M component of the tariff as agreed between the Company and the Applicant (c) revise the Foreign Component of RoE of the tariff as agreed between the Company and the Applicant in clause 2.2(a)(vi) of the NSA; (d) revise Insurance Component of the tariff as agreed between the Company and the Applicant in clause 2.2(a) (xii) of the NSA; (e) revise the existing mechanism of “Take or Pay” to Hybrid Take and Pay” model, whereby the Company is entitled for 35% of ROE as part of CPP and remaining ROE component is subject to generation beyond 35% of the Contract Capacity (clause 2.2(a)(vii) of the NSA), and (1) Approve the Tariff Adjustment to become effective as provided in clause 2.1 of the NSA and notified accordingly.
CPGCL(Guddu) tariff : fixed O&M( local ) Rs 0.1712 per unit( lower of 5 % per annum or actual average NCPI for preceding 12 months ;(ii) variable O&M( foreign), Rs 1.1142 per unit( US CPI &PKR/$ provided that 70 per cent PKR/$ depreciation and 100 per cent PKR/ $ appreciation is applicable) ;(iii) RoE- Rs 0.8479 per unit ( recomputed based on 13 per cent rate of return at the fixed exchange rate of Rs 168/ $ and no further exchange rate indexation ; and (iv) insurance – actual subject to a maximum limit to be capped at 0.9% of allowed EPC cost.
NPGCL (Nandipure : (i) fixed cost O&M( local) Rs 0.3698 /kWh for 450 MW and proposed Rs 0.3284 / kWh for 507 MW ;(ii) variable O&M( local) Rs 0.0132/ kWh for 450 MW and Rs 0.0117 / kWh for 500 MW ( lower of 5 per cent annum or actual average NCPI for the preceding 12 month .
Variable O&M( foreign) Rs 0.7553 kWh for 450 MW and Rs 0.6708 / kWh for 500 MW: Fixed O&M ( foreign) Rs 0.4592 kWh for 450 MW and Rs 0.4078 kWh/ for 500 MW( US CPI & PKR/$ provided that 70 % PKR/ $ depreciation and 100 % PKR/$ appreciation is applicable.
RoE: Rs 1.0038/ kWh for 450 MW and Rs 0.8915/ kWh for 500 MW ( recomputed based on 13 % rate of return rate of Rs 168/$ and no further exchange rate indexation till the whole term.
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