NEPRA to hear tariff revision request from seven IPPs today

Seven independent power producers (IPPs) along with the Central Power Purchasing Agency (CPPA) have submitted a petition to the National Electric Power Regulatory Authority (NEPRA) requesting a revision of their tariff. NEPRA is set to hold a hearing on the matter today [Monday].

The petition, which includes companies such as Nishat Chunian Power, Nishat Power, Narowal Energy Limited, Liberty Power Tech Limited, Engro Powergen Qadirpur Limited, Sapphire Electric Power Limited, and Saif Power Limited established under the Power Generation Policy of 2002, calls for a review of the mechanism used to adjust the exchange rate difference between the Pakistani rupee and the US dollar. The hearing will focus on this issue as part of the tariff revision request.

The government’s Task Force, consisting of various high-level officials including Special Assistant to the Prime Minister (SAPM) on Power Muhammad Ali, National Coordinator Lt General Muhammad Zafar Iqbal, Nepra Chairman, and representatives from CPPA-G, PPIB, and SECP, was engaged with both 1994 and 2002 IPPs.

Key terms of the agreement include a revised tariff structure starting from November 2024. Some of the major changes include the modification of the operational and maintenance (O&M) cost indexation, re-basing the cost of working capital and O&M tariffs, and the introduction of a hybrid take-and-pay mode for the return on equity tariff component. 

Additionally, there are conditions for sharing profits up to FY’23, the waiver of delay payments until October 2024, and changes to the arbitration process to align with local laws.

The government has also claimed that these renegotiated agreements will save approximately Rs1.4 trillion over the remaining lifespan of these power plants. 

While 16 IPPs have signed revised contracts, one IPP, Halmore, refused to sign, accusing the government of mistreatment and criticising the terms of the agreement. 

In response, the government has asked Nepra to conduct a forensic audit of Halmore’s power plant, which is owned by a British national. Nepra has opened the matter for public comment and will hold a public hearing on March 24, 2025, to further discuss the issue.