PSMA files tariff petition with NEPRA

Islamabad: Pakistan Sugar Mills Association (PSMA) has sought tariff determination of 60-MW and above co-generation power projects for delivery of electricity to the Central Power Purchasing Agency (CCPA) of NTDC and submitted tariff petition with National Electric Power Regulatory Authority (NEPRA) in this regard.

PSMA has submitted a typical two-part tariff structure with an energy tariff of Rs 3.368/Kwh for the energy actually dispatched and a capacity tariff of Rs 4.506/Kwh based on contract capacity or tested capacity for a period of ten years. PSMA has also sought an energy charge of Rs 3.368 /Kwh tariff and Rs 1.377/Kwh capacity tariff for 11 to 30 years. PSMA has sought these tariffs for delivery of electricity to CCPA of NTDC for power procurement on behalf of Wapda distribution companies.

Capacity charge includes insurance, working capital, debt service, return on equity (ROE). The ROE during construction and withholding tax while energy tariff includes fuel cost component. In the petition, the tariff has been proposed based on PSMA estimated $96.6764 million cost of co-generation power project for the entire scope of works based on current prices prevailing in the international market.

The proposed tariff for 30 years will be approved by NEPRA as a result of the determination will be informed by PSMA to its members and interested sugar mills that wish to opt the tariff shall apply for generation licence to NEPRA for implementation of the co-generation power projects accordingly.

According to an official, the government has prepared the guidelines for processing cogeneration projects to be established by the sugar industry have been prepared and up-coming Power Co-generation Projects have been exempted from Letter of Intents (LOIs). The government has decided that these projects would be directly issued Letter of Support (LOS) for quick implementation of the projects. Sources said the decision to issue only LOS) has been made to encourage the sugar mill owners for setting up co- generation power facilities so that the power crisis should be tackled.

The proposed tariff will be a two-part tariff comprising capacity and energy charges that would be integrated into the power purchase agreement to be entered into between the sponsor of the project and CCPA of NTDC.

As power shortages crisis is looming in the country, the power supply from co-generation power plants by the sugar industry would result in bridging the gap between supply and demand of the electricity in the country. At present, the total power generation stands at around 11000 MW against the demand of over 11500 MW.