Nepra moves to rupee-based indexations for four power plants

ISLAMABAD: In a landmark move, the National Electric Power Regulatory Authority (Nepra) has decided to discontinue dollar-based indexations of Haveli Bahadur Shah, Balloki, NPGCL, and CPGCL power plants, transitioning instead to rupee-based indexations fixed for the entire useful life, paving the way to save Rs1.6 trillion in the remaining life of projects.

The Nepra held a public hearing on Thursday at its headquarters in Islamabad under the chairmanship of Waseem Mukhtar. The hearing addressed tariff adjustments pertaining to Haveli Bahadur Shah, Balloki, NPGCL, and CPGCL power plants.

This strategic revision aims to curb foreign exchange exposure and reduce tariff volatility for consumers. Further reforms include capping the indexation for Operations & Maintenance (O&M) costs to 70 per cent of rupee devaluation, down from the previous 100 per cent.

Local O&M expenses will now be indexed to either 5 per cent or the 12-month average of the National Consumer Price Index (NCPI), whichever is lower.

Additionally, the return on equity (ROE) structure has been rationalised. Plants will now receive 35 per cent of the ROE as fixed, with the remaining 65 per cent linked directly to the actual operation of the plant -- a significant departure from the previous 100 per cent guaranteed ROE model.

These all-prudent measures will result in a projected saving of Rs1.6 trillion over the life of the projects, including Rs 22 billion in the current financial year alone, says the press release.