ISLAMABAD - The National Electric Power Regulatory Authority (Nepra) on Friday downward revised its earlier determination and reduced upfront tariff for new bagasse based power plants by 23.34 percent.

In its determination, the Nepra announced levelised tariff of Rs7.97/unit (kwh), for 30 years, which is 23.34pc less than Rs10.4078/unit determined in 2013. The 2013 upfront tariff was originally announced for one year but extended till May 2017. The tariff determination of 2013 contracted a total bagasse based power generation capacity of about 940MW.

According to the fresh determination there will be no cap on induction of new bagasse based cogeneration projects but required that sugar mills owners would have to lock in these rates within one year. The upfront tariff will be applicable for all new cogeneration projects using bagasse along with other biomass and would need to be recommended by the Alternate Energy Development Board (AEDB) or other relevant agencies.

The companies would be required to certify that all the plant and machinery to be installed will be new and of international standards and have consent of the power purchaser ie National Transmission & Disptach Company (NTDC) to purchase electricity. The order further said that to opt for upfront tariff once exercised will be irrevocable and the companies will have to achieve financial close within six months from the date of approval of their upfront tariff by the Nepra.

The upfront tariff granted to any company will no longer remain valid if financial close is not achieved within six months or a generation licence is declined to that company. The targeted maximum construction period after financial close would be 18 months. No adjustment will be allowed in this tariff to account for financial impact of any delay in project construction. However, the failure of a project to complete construction within 18 months of financial close will not invalidate the tariff granted to it.

The projects interested in availing upfront tariff will submit unconditional formal application to the regulator for approval of its upfront tariff. The projects opting the new tariff shall secure debt under the concessionary financing scheme of State Bank of Pakistan (SBP). This tariff shall be allowed on the approved terms of commercial financing only after availing the option of financing under SBP scheme.

All energy offered for sale by the cogeneration projects, to the extent of approved plant factor, shall be taken by the power purchaser on priority basis. The energy offered beyond set plant factor shall be procured as per the principles of economic dispatch. Variable component of tariff including fuel shall not be paid for the energy not dispatched by the power purchaser both during season and off-season.

Regarding penalty, the order said that the company would attract penalty for failing to fulfill its commitment of making the declared capacity available during season and off season and the power producers shall have the option to offer energy to the respective distribution company (Disco) at 11 KV or 132 KV, or to the CPPA/NTDC at 132 KV, provided that the cost of interconnection, grid station upgrades etc for power evacuation shall be incurred by the respective purchaser.