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Neelum Jhelum Hydropower Company rejects new tariff

February 24, 2019

KARACHI: Neelum Jhelum Hydropower Company that operates 969 megawatts of run-of-the-river hydroelectricity plants has rejected the tariffs set by the power regulator as it said the rates wouldn’t be enough to generate much-needed revenue for debt repayment, an official said on Saturday.

Neelum Jhelum Hydropower Company rejected the tariff determined by the National Electric Power Regulatory Authority (Nepra) for sale of power to Central Power Purchasing Company and filed a review petition, the official added.

Neelum-Jhelum Hydropower Company — a subsidiary of the Water and Power Development Authority (Wapda) — filed a tariff review petition before the Nepra, asking for Rs13.24/kilowatt-hour (kWh) reference tariff over the 50 year life span of the project.

The reference tariff is Rs14.59/kWh for the first 20 years, which will then drop to Rs5.10/kWh for the remaining 30 years.

The total cost of the project has been reported at $4.825 billion.

The National Electric Power Regulatory Authority, however, allowed the seller to charge a tariff of Rs5.9180/kWh on take and pay basis with must run condition for a period of one year.

The tariff was determined on take and pay basis as against request of tariff determination on take or pay basis in line with the government’s power generation policy for hydel independent power producers (IPPs) and on the analogy of tariff determined by Nepra for hydel IPP and Wapda hydroelectric projects.

The company requested the National Electric Power Regulatory Authority to determine power sale rate in two parts i.e. variable charge to meet with revenue requirement for variable overhaul and maintenance (O&M) and water utilisation charges based upon actual generation and fixed charge to meet revenue requirement for fixed O&M, insurance, debt servicing and return on equity based upon installed capacity of Neelum Jhelum hydropower project.

The company said the revenue for debt servicing at determined rate will be generated to the level of Rs26.636 billion as against revenue requirement of Rs43.024 billion for the current financial year for the loans already withdrawn and due for repayment.

The company said the determined tariff will be applicable from the date of government’s notification, whereas Neelum Jhelum Hydropower Company has been supplying power to national grid since the commissioning date of Unit-4 on June 19, 2018.

Located in Kashmir, Neelum Jhelum hydropower project has four turbines of 242.25 megawatts each. The project has annual power generation capacity of 5,150 gigawatt hours or 5.15 billion units.