The interim tariff, which would be for 30 years for the RLNG-based power plant, comes after apparent pressure from the Punjab government without keeping in mind various cost factors.
This project is one of three the government decided to pursue through the import of LNG, which would have a combined capacity of 3,600MW and will cater to Punjab’s growing energy needs.
The QATPL is a private limited company, wholly owned by the Government of Punjab and incorporated under the Companies Ordinance 1984 on March 25, 2015. The facility will be a thermal IPP using RLNG as the primary fuel and High-Speed Diesel (HSD) as a back-up.
The regulator allowed a tariff of Rs6.58 per unit for RLNG, Rs10.67 per unit for High Speed Diesel (HSD) and Rs7.75 per unit on gas during its testing period.
QATPL, in a letter dated February 15, 2016, filed a tariff petition for the project, requesting for an immediate application of the reference generation tariff/interim tariff. It also submitted that the power purchase agreement with CPPAG and gas supply agreement with SNGPL had been finalised and were subject to issuance of the tariff.
QATPL also submitted that in terms of the EPC contract, an irrevocable letter of credit for the amount of $233.211 million and Rs6.446 billion in favour of the EPC contractor had been opened on October 21, 2015. The letter said that banks have signed an underwritten term sheet with QATPL, committing to finance the debt portion of the project and an underwriting fee of Rs270 million has been paid to lending institutions.
QATPL had also informed that it was obligated to open the Letter of Credit (LC) for the remaining 55% of the EPC cost by mid April 2016 and, for this purpose, financial close of the project is required to be achieved by the end of March 2016. Financial close in turn is dependent on completion of signing of Power Purchase Agreement (PPA), Implementation Agreement (IA) and Letter of Support (LOS) which are dependent on a viable tariff.
Hence, a viable and bankable tariff is immediate requirement of the Project, stated the letter, adding that if a viable tariff is not issued to the project immediately, the company will face a situation of contractual default and the timeline of the project of national importance will be compromised.
Nepra also considered the request of the petitioner for grant of interim tariff and considering the facts, circumstances and grounds, decided to allow immediate application of tariff.
However, the authority has decided to keep some requests of the petitioner pending for the final order which include fixing lesser thermal efficiency levels as against the guaranteed efficiency levels agreed by the EPC contractor.
It also includes provision of Debt Service Reserve Account (DSRA), fixing the construction period of 30 months as against 27 months agreed in the EPC contract, financing fees and charges of 4.06% against the established benchmark of 3.5%.
Other factors, which would be decided in the final order, include insurance at the rate of 1.35% each during construction and annual operation against the established benchmark of 1%.
Read : Nandipur power plant: NEPRA refuses to approve Rs23 billion higher cost
