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July 20, 2019

NEPRA directs DISCOs to modify agreements with bagasse-based plants


July 20, 2019

KARACHI: National Electric Power Regulatory Authority (NEPRA) has advised all distribution companies (DISCOs) to modify their energy purchase agreements (EPAs) signed with the bagasse captive power plants to account for the change in bagasse pricing and indexation mechanism.

The authority has fixed the bagasse price of Rs2,750/ton for the period starting from October 1, 2018 to calculate the corresponding fuel cost component (FCC). This approved bagasse price would be allowed indexation of 2.0 percent after every two years.

New bagasse power projects awarded upfront tariff, 2013 and have achieved COD were advised to file the request for the approval of FCC, to be applicable from October 1, 2018, based on bagasse price of Rs2,750/ton.

NEPRA had initiated suo moto review proceedings to modify the working and indexation mechanism of bagasse pricing and corresponding fuel cost component of bagasse captive power plants as well as new bagasse co-generation power projects which were awarded Upfront Tariff, 2013.

In 2012, NEPRA approved tariff for bagasse captive power plants at the rate of Rs5.15/kWh comprising of FCC of Rs3.62/kWh and fixed component of Rs1.53/kWh. The FCC was worked out based on gas price of Rs238.38/MMBtu and efficiency of 22.49 percent.

In March, 2013, Economic Coordination Committee (ECC) approved Framework for Power Cogeneration 2013 for Bagasse and Biomass. NEPRA, in pursuance of Framework 2013 issued Upfront Tariff, 2013 for new bagasse cogeneration power projects wherein the bagasse prices and corresponding FCC was worked out based on the prices of the imported coal (South African) using heating value of both fuels.

The yearly indexation of the FCC was also linked with the variation in international price of the imported coal.

Authority in 2014 through suo-moto proceedings applied the fuel pricing and adjustment mechanism as approved in Upfront Tariff, 2013 on bagasse captive power plants. A total tariff of Rs7.82/kWh was approved for bagasse captive power plants comprising of FCC of Rs6.29/kWh and fixed cost component of Rs1.53/kWh.

In April 2017, NEPRA initiated proceedings for another upfront tariff for new bagasse cogeneration power projects as Upfront Tariff, 2013 was set to expire on May 28, 2017. After due proceedings, Upfront Tariff, 2017 was announced on November 10, 2017.

In Upfront Tariff, 2017, the bagasse price was worked out on the basis of available market prices of crushing and non-crushing season.

The bagasse price was set at Rs2,750/ton and indexation thereon of 2.0 percent flat after every two years was allowed in the determination. Upfront Tariff, 2017 was notified by the federal government on January 22, 2018.

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