KARACHI: In order to eliminate the load shedding, and add new generation capacity at affordable price, the Government of Pakistan took initiative and decided to provide Upfront Tariff for coal based power projects so that procedural requirements and processing time could be reduced to the minimal.
Accordingly, NEPRA announced upfront tariff in June 2013 for both the local and imported coal based projects of 200, 600 and 1000 MW capacity based on local and foreign financing. It was expected that the upfront tariff would attract large private investment in coal power plants. However, so far no investor has accepted the upfront tariff for setting up the power plant.
The Ministry of Water and power taking proactive approach endeavoured to find the reasons of non-acceptance and interacted with the potential investors, lenders and other key stakeholders within the country and abroad, says a release.
As a result of this exercise, the Ministry of Water and Power decided to file the review petition before NEPRA for revision and rationalization of tariff so that the new coal based plants could come in operation on fast track basis.
In this regard NEPRA conducted public hearing on 9th April 2014 wherein representatives of the potential investors, utilities, provincial governments and general public and media heavily participated. The Secretary Water and Power, Saif Ullah Chattha gave a detailed presentation on the context and rationale of the revision in the upfront tariff on coal power generation providing current energy situation, fuel mix, future demand and supply position, financing issues, government plans to increase hydel power generation on fast track basis, etc.
He highlighted that government has very carefully reviewed all the available options with emphasis on the indigenous and renewable resources. He informed that for Base Load plants to meet the increasing electricity demand, the coal is the best option in the present position as other renewable resources (solar, wind, hydro) are seasonal and cannot be treated as base load plants for provision of electricity throughout the year while oil is very expansive and local gas is already in shortage.
Further, he pointed out that adjustments in the upfront tariff are required to make it in line with the actual capital and operating costs and providing reasonable incentives to the investors for putting in huge investment in coal based plants.
The NEPRA authority led by its Chairman Khawaja M. Naeem heard the hearing, asked pertinent questions to figure out facts. The participants of the hearing provided their comments, observations and suggestions on the review petition filed by the Government which were thoroughly discussed during the hearing. NEPRA is expected to provide its revised upfront tariff for coal based power projects very soon.