ISLAMABAD

The National Electric Power Regulatory Authority (Nepra) on Friday announced around 20 percent increase in the tariff of small hydropower generation projects with an installed capacity of up to 25MW.
After reviewing the motions for Leave for Review filed against the determination of the Authority, on April 2, 2015, the authority has came up with a new levelised tariff of 10.88 cents per kilowatt for low head, with the presumed plant factor of 50 percent, with 100 percent foreign debt, while for total local debt the rates has been revised to 12.78 cents per kilowatts.
For high head with full foreign investment the rates will be 10.05 cents per kilowatts while for 100 percent local debts the tariff will be 11.82 cents.
The tariff will be same for plant factor up to 65 percent for low head, foreign and locals debts while for high heads the tariff for 55 percent plant factor will be 9.14 cents for foreign while 10.75 cents per kilowatts for local debt.
As increase in plant factor the high head tariff decreases up to 6.28 cents per kilowatts for 80 percent, for foreign dent while 7.393 for local debt.
According to the decision the tariff was revised on stakeholders request. After Nepra decision in April this year, various stakeholders submitted review petitions and after considering their requests the authority came up with this new tariff.
In its April decision the authority announced levelised tariff of Rs. 7.449 per kilowatts for low head projects with 100 percent foreign debts, while for local debt the levelised tariff was set at Rs. 9.76 per kilowatts.
The petitioners including government of KPK, sought review of the Upfront Tariff Determination on the following grounds that The EPC cost assumed in the Upfront Tariff Determination is too low; A mechanism for indexation of civil works cost (one-time adjustment at COD) on account of variation in prices of major inputs (i.e. Fuel, Steel, Labor and Cement) during the construction period has not been allowed; The assumed Debt financing cost (premium over KIBOR) is low; The assumed Debt-Equity ratio is low; The percentage assumed for Financing fee and charges is low; and the timelines regarding validity of the upfront tariff and maximum time for financial close may be altered;
On above, the authority decided to revise the previous onetime adjustment, under which 40pc of the assumed EPC cost will be adjusted over 36 months (maximum) starting from the date of financial close of the project for USD/PKR exchange rate variation, and 60pc of the assumed EPC cost converted at reference USD/PKR exchange rate of 101.95 will be adjusted over 36 months (maximum) starting from the date of financial close of the project.
Small hydropower projects are considered a viable source in Pakistan as they do not require building of large dams and do not pose environmental problems of deforestation, submergence or rehabilitation.
The upfront tariff was introduced with an objective of simplifying the tariff process, providing certainty to the potential investors, fast-tracking the development of commercially attractive small hydropower sites, allowing material risk coverage to the investor.