‘Tariff-based competitive bidding stalled by NEPRA snags’

KARACHI: The independent renewable power producers in the country are opting for cost-plus tariff regime, as the regulator was yet to approve the 'request for proposal' (RFP), effecting competitive bidding for generation tariff, sources said on Friday.

The RFP is the document that includes the necessary information, benchmark parameters, terms and conditions and bid evaluation criteria for the competitive bidding regime. Under cost-plus tariff a power producer is paid its actual cost plus an agreed profit, whereas in tariff-based competitive bidding is price discovery mechanism in which various generators bid and one with the lowest bid gets the contract.

“The NEPRA (National Electric Power Regulatory Authority) has not issued the document, despite the fact Competitive Bidding Tariff (Approval Procedure) Regulations were notified in 2014,” an official close to the matter said.

The source said certain wind power producers were issued letters of intent LoIs by Energy Department of Sindh (EDS) in 2015, and these power producers were advised to wait for a wind upfront tariff to be announced by the NEPRA.

“In January 2017, a wind benchmark tariff decision for bidding was issued by the authority, but an RFP was still to be issued,” the official said.

Meanwhile, the EDS filed a review petition challenging the applicability of bidding for unsolicited wind LoI-holders and requested an upfront tariff.

However, the NEPRA rejected the position of Energy Department Sindh but stated in its decisions that there was no restriction on unsolicited projects to apply tariff under Tariff Standard and Procedure Rules, 1998.