NEPRA approves Rs7.75 per unit interim tariff for Bhikki Power Plant

The National Electric Power Regularity Authority (NEPRA) has allowed Quaid-e-Azam Thermal Power (Private) Limited (QATPL) to charge the Central Power Purchasing Agency Guarantee Limited, an interim tariff of Rs 7.75 per unit for combined cycle operation and simple cycle operation for its RLNG based 1180 MW Bhikki power plant, Sheikhupura.
NEPRA admitted the tariff petition on February 16, 2016. The Authority 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 decided that six questions would be decided in the final order. The questions relate to the lesser thermal efficiency levels as against the guaranteed efficiency levels agreed by the EPC contractor, financing fees and charges of 4.06 per cent against the established benchmark of 3.5 per cent and insurance at a rate of 1.35 per cent each during construction and annual operation against the established benchmark of 1 per cent each during construction and annual operation.
The QATPL is a private limited company, wholly owned by the government of Punjab. The facility will be a thermal IPP using re-gasified liquefied natural gas (RLNG) as the primary fuel and high-speed diesel (HSD) as back-up fuel. The proposed project is based on the combined cycle technology. The facility configuration consists of two gas turbines GE 9HA, two HRSGs and one steam turbine.
QATPL had filed a tariff petition on February 15, for the project. The petitioner had also requested that the immediate application of the reference generation tariff or Interim tariff be allowed. It was required for power purchase agreement with CPPAG and gas supply agreement with SNGPL. The two agreements have been finalised and are subject to issuance of tariff.
QATPL also submitted that in terms of EPC contract, irrevocable letter of credit for the amount of $233.211 million and Rs 6.446 billion in favour of the EPC contractor has been opened on October 21, 2015. Banks have signed an underwritten term sheet with QATPL committing to finance the debt portion of the project and that underwriting fee of Rs 270 million has been paid to lending institutions.
According to QATPL, it is obligated to open LC for the remaining 55 per cent of the EPC cost by mid April 2016 and for this purpose, financial close of the project is required to be achieved by end of March 2016. Financial close in turn is dependent on completion of CPs including signing of PPA, I.A and L.O.S. All these CPs are dependent on a viable tariff. Hence, a viable and bankable tariff is the immediate requirement of the project. If a viable tariff is not issued to the project immediately, the company will face situation of contractual default and the timeline of a project of national importance will be compromised.