Hydropower project: TI-P voices reservations over proposed tariff

Business Recorder

ISLAMABAD: Transparency International- Pakistan (TI-P) has raised its reservations on proposed tariff for 40.80MW KOTO hydropower project being developed by Pakhtunkhwa Energy Development Board (PEDO).

In a letter to Chairman Nepra, Tauseef, H. Farooqi, other top government office holders, Chairman NAB and Registrar Supreme Court of Pakistan, TI-P said that it has received a notice of hearing in the matter of tariff petition filed by PEDO for its 40.80MW KOTO hydropower project located at district lower Dir of Khyber Pakhtunkhwa, to be held on August 26, 2020 via Zoom.

After going through the advertised notice of hearing of August 08, 2020 and received by TI-P on August 11, 2020 and subsequent documents of tariff petition and list of issues received by Nepra Pakistan, TI-P has serious reservations on considering this hearing petition by Nepra.

According to the petition filed by PEDO, the proposed tariff (1-10) years is Rs.18.387/kWh (US cents 11.812/kWh), proposed 11-30 years tariff is Rs 9.625/kWh (US Cents 6.209/kWh) and levelized, 1-30 years, tariff is Rs. 15.2851/kWh (US Cents 9.8614/kWh).

TI-P is of the view that the proposed tariff is 236% higher than the cheapest tariff of Rs. 7.7863 per unit approved by Nepra for Access Solar Private Limited’s (ASPL) 11.52MW solar power project in year 2018. In the current scenario of the Pakistan power sector, the proposed tariff, at a higher cost of Rs. 18.386/kWh (US Cents 11.812/kWh) may not be financially and economically feasible for the electric power sector of Pakistan.

Similarly, in June 2020, Abu Dhabi has awarded a BOT contract of solar energy at US Cents 1.35/kWh which amounts to Rs. 2/kWh. On the other hand, this project is being considered at a higher cost of Rs. 18.386/kWh (US Cents 11.812/kWh). The “unrealistic” determination by Nepra will affect the tariff and if it rises, the electricity tariff is bound to become unaffordable for the vast majority of consumers. TI – Pakistan has been informing Nepra for last 10 years about the “unrealistic” tariff determination through its sister organization whistleblower Pakistan. Nepra has been

told by TI-P’ in its objections that high tariff- based power plants should not be established namely furnace oil, coal and rental power plants. However, Nepra has always rejected TI-P’s objections.

Recently, the government of Pakistan negotiated with the Independent Power Producers (IPPs) and signed various MoUs based on the Energy Policies of 1994, 2002 and 2015 in order to reduce their tariffs, conversion of dollar based – tariff on rupee, operational expenses and capacity payment which were always objected by the whistleblower Pakistan.

Another objection of TI is that given the zero-fuel input of the run of river hydropower scheme, the tariff should not have been more than Rs. 2/3/kWh. TI has also noted that in the last 2 years, Nepra has approved hydropower projects of Kohala Dam at Rs. 14/kWh (parity in USD terms at $120) which should also be reviewed. TI-P has urged the regulator to reject tariff petition of KODO project and reduce it in the light of best international tariffs.

Comments are closed.