Foreign solar power developers warn exit if tariff cut

KARACHI: Foreign solar power developers on Thursday warned that if Pakistan’s government cuts the upfront tariff from the current level they will wind up and go back, officials said.
The officials said the US-, UK- and China-based solar power developers are against a reduction in the tariffs for the solar-based power projects.
The National Electric Power Regulatory Authority (Nepra) held a public hearing in Islamabad on Thursday to deliberate on the proposed upfront tariff of 9.25 cents/unit for 2016 compared with 14.15 cents/unit set in 2015. The event was very well attended and representatives of the solar power developers sharply opposed any reduction in the existing tariff and demanded that the tariff of 14.15 cents should be continued for another year. Sohail Khan, representing UK’s Storm Harbor said the company got a letter of interest (LoI) for 200 megawatts of power project and was awarded the tariff, “but the authorities are not granting the letter of support and therefore there is a delay in the progress.”
Opposing a tariff cut, participants said lower tariffs in India, UAE or any other country could not be presented as a reason to the rate cut, as the conditions as well as financing cost and other relevant factors are different in every country even in provinces and states. The officials said finance cost in India is much lower due to their better credit ranking, while financing cost is nil in UAE where the government owns majority shares in solar projects. Nepra proposed tariff of 9.25 cents/unit for 2016 on the basis of the prevalent tariffs in India and UAE.
Rob Mc Nabs of Eversheds, a European firm, said the authority had done no homework and “there is no data available to justify the proposed tariff.”
Rob said the authority should have given a timeline, while the research and survey should have been conducted to arrive at a viable and feasible proposal.
Qui Changbin of Zonergy China said when they were issued LoI an upfront tariff was there and they had prepared feasibilities according to that tariff.
Changbin said they are willing to support the government to gain energy security under an obligation of China-Pakistan Economic Corridor. He said there were various tariff regimes in China, ranging from 15 cents to 20 cents/kilowatt hour (unit). He added that 14.15 cents was already lower than the rates prevailing in China and any reduction would compel them to leave, which would also affect the development of the economic corridor.
The developers, who have received LoIs from the Alternate Energy Development Board, were of the view they had completed all the paperwork and their tariff applications were lying with the authority, but the tariff was not being awarded.
A Sindh government official lashed out at the Nepra and the National Transmission and Despatch Company (NTDC), saying the provincial government is bringing investments in the energy sector but the regulator and NTDC are creating hurdles in the development of renewable energy projects in the province.