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August 15, 2018

Taunsa hydropower project: Nepra awards first generation tariff based on competitive bidding


August 15, 2018

KARACHI: Pakistan’s power regulatory authority has awarded the first power generation tariff based on competitive bidding to 135MW Taunsa hydropower project, an official said.

National Electric Power Regulatory Authority (Nepra) has approved the request for proposal (RFP) of Taunsa hydropower project and six other projects identified by PEDO under the Competitive Bidding Tariff (Approval Procedure) Regulations, 2014.

Subsequently, the bidding for Taunsa hydropower project was successfully completed and the authority accordingly notified the lowest successful bidder recently, the official said.

This is the first power generation project whose tariff has been determined through competitive bidding. The details of the tariff could not be known. With enough generation capacity contracted for the next five to 10 years, the government planned to gradually move towards international competitive bidding for lowest tariff for future power projects, ending current practice of inviting investments on upfront tariffs.

The hydropower projects, for which RFPs have been approved, included Taunsa hydropower project of 135MW at Taunsa Barrage. The projects in KP included 188MW Naran HPP in Mansehra, 102MW Shigo Kas HPP in Lower Dir, 99MW Arkari Gol in Chichtral, 96MW Bata Kundi in Mansehra, 21MW Ghorband Khwar in Shangla and 12MW Nandihar Khwar in Batagram. Until now, all generation tariffs for independent power producers in Pakistan have either been based on upfront tariffs or cost-plus tariffs that have often invited criticism of the lack of transparency. Hence, Nepra decided on a transition towards a tariff regime based on competitive bidding, which is universally recognised as the fairest and most transparent method of determining tariffs.

Nepra through regulations is encouraging competitive bidding for the determination of tariffs in other technologies, including wind, solar and thermal projects.

According to Nepra’s state of the industry report, over the last few years, the policymakers have recognised it and made concerted efforts for development in the power sector, in general, and generation sector, in particular. Sufficient generation capacity had already been added in the system, resulting in considerable improvement in load-shedding across the country. As per the records, further generation capacity at different stages of implementation will also be added over the next three years, leading to a capacity surplus scenario in view of the available demand forecasts.

Evacuation of power from these facilities has put extra burden on transmission and distribution sectors. Infrastructure deficit and absence of performance improvement in these sectors may hamper the economic benefits foreseen due to huge investment in the generation facilities, the report added.

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