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January 20, 2019

Two wind power producers seek generation tariff

Business

January 20, 2019

KARACHI: Two wind power plants of 50MW each have approached the National Electric Power Regulatory Authority (NEPRA), seeking tariff for their respective electricity generation facilities, a document revealed on Saturday.

Sino Well Pvt Ltd and Shafi Energy Pvt Ltd have proposed 25-year levelised generation tariff for proposed sale of power to Central Power Purchasing Agency (CPPA) at Rs7.638/kWh and Rs7.119/kWh, respectively.

Both the proposed wind power plants are being setup in Jhimpir, Sindh with a cumulative cost of $160 million.

Hearing will be held on January 30 to determine whether the tariff proposed by Sino Well Pvt Ltd and Shafi Energy Pvt Ltd are acceptable and whether the project has been designed under competitive conditions.

The process will include a review of engineering, procurement and construction (EPC) and operations and maintenance costs, as well as other financials.

In December 2017, the government had announced to scrap the upfront tariff mechanism for projects based on domestic renewable energy resources and decided to award power generation contracts through competitive bidding.

According to the Renewables Readiness Assessment: Pakistan report produced by the International Renewable Energy Agency (IRENA) last year, the country’s renewable power market would widen and include projects sought by NEPRA, as well as unsolicited schemes.

NEPRA has set in motion a process for competitive bidding auctions. For unsolicited projects, project owners can opt for either cost-plus or upfront tariffs.

In both, NEPRA determines, “The technical and financial parameters for capital and operating expenditures, and applies a rate of return on equity,” according to the IRENA report.

With the cost-plus mechanism, the project owner files a proposed tariff, which NEPRA reviews and adjusts, if necessary. The upfront tariff involves NEPRA and other relevant agencies predetermining tariffs for specific project types and inviting industry representatives and experts to comment before setting a final feed-in tariff.

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