NEPRA has taken the first significant step towards implementation of its long-term vision of market-driven tariff based on competitive bidding by approving Request of Proposals (RFPs) of seven hydropower projects with a total capacity of 653 MW.
These projects would be implemented in the private sector through open competitive bidding by the provincial power boards (PPDB in Punjab and PEDO in Khyber Pakhtunkhwa by floating the NEPRA approved RFPs and inviting private power companies to quote the lowest levelised tariffs, which shall be the sole criterion for winning the bids.
Until now, all generation tariffs for IPPs in Pakistan have either been based on upfront tariffs or cost-plus tariffs that have often invited criticism of lack of transparency. Hence, NEPRA has decided on a transition towards a tariff regime based on competitive bidding, which is universally recognised as the fairest and most transparent method of determining tariffs.
NEPRA also intends to encourage competitive bidding for determination of tariffs in other technologies including wind, solar and thermal projects in the future.
