Kapco seeks higher tariff, take-or-pay model for equity return

ISLAMABAD: Kot Addu Power Co Ltd (Kapco) has requested approval from Pakistan’s energy regulator for a tariff increase of up to Rs34.47 per unit and a guaranteed return on equity (RoE) under a take-or-pay agreement.

In an addendum to its tariff petition, Kapco asked the National Electric Power Regulatory Authority (Nepra) to increase the fuel cost component (FCC) by 1.5 times for blackout operations and adjust its reference generation tariff in response to market and regulatory changes. The proposed increase would apply when the National Power Control Center (NPCC) dispatches Kapco’s simple cycle units during power outages.

The petition outlines specific tariffs for generation using re-gasified liquefied natural gas (RLNG) and low sulfur furnace oil (LSFO). RLNG-based energy costs range from Rs28.91 to Rs31.59 per kWh, while LSFO-based power is priced between Rs30.45 and Rs33.04 per kWh.

The total reference tariff, including capacity charges, falls between Rs30.30 (for gas/RLNG) and Rs34.47 per kWh (LSFO).

Kapco also proposed an RoE [return on equity] structure based on an 84.4 percent load factor, with payments guaranteed up to 25 percent availability. Beyond that, payments would depend on actual power generation. The company estimates a net dependable capacity of 495MW for RLNG and 478MW for LSFO, with efficiency benchmarks at 46.44 percent and 45.54 percent, respectively. The petition includes requests for tariff indexation linked to fuel prices, inflation (CPI), interest rates (KIBOR), and insurance costs. Kapco also seeks reimbursement for workers’ welfare funds, black start services, and corporate taxes within a month of payment.

Kapco has based its tariff proposal on fuel price assumptions of $12.37 per MMBTU for RLNG and Rs150,817.50 per ton for LSFO, including transport costs. Nepra has invited stakeholders to submit comments or intervention requests within seven days before finalising its decision.