Seven IPPs Seek Tariff Revision from NEPRA Amid Rs1.4 Trillion Savings Deal

Seven independent power producers (IPPs) and the Central Power Purchasing Agency (CPPA) have filed a petition with the National Electric Power Regulatory Authority (NEPRA) to adjust their tariff. NEPRA will hold a hearing on this today, Monday.

The petition comes from companies like Nishat Chunian Power, Nishat Power, Narowal Energy Limited, Liberty Power Tech Limited, Engro Powergen Qadirpur Limited, Sapphire Electric Power Limited, and Saif Power Limited, all set up under the 2002 Power Generation Policy. They want NEPRA to review how the exchange rate difference between the Pakistani rupee and the US dollar is handled in their tariff.

A government Task Force, including officials like Special Assistant to the Prime Minister on Power Muhammad Ali, National Coordinator Lt General Muhammad Zafar Iqbal, the NEPRA Chairman, and members from CPPA-G, PPIB, and SECP, worked with IPPs from the 1994 and 2002 policies.

The agreement includes a new tariff setup starting November 2024. Changes involve tweaking the operational and maintenance (O&M) cost adjustments, resetting the working capital and O&M tariffs, and adding a hybrid take-and-pay option for the return on equity part. It also covers sharing profits up to FY’23, waiving delay payments until October 2024, and updating the arbitration process to follow local laws.

The government says these revised deals will save about Rs1.4 trillion over the remaining years of these power plants.

While 16 IPPs have agreed to the new terms, one IPP, Halmore, rejected the deal, claiming the government treated it unfairly and disagreeing with the terms.

The government has responded by asking NEPRA to do a forensic audit of Halmore’s power plant, owned by a British national. NEPRA has invited public comments and scheduled a public hearing for March 24, 2025, to discuss it further.