The upfront tariff on coal-based power projects in Sindh has not been decided yet as the Sindh government is facing stiff resistance from National Electric Power Regulatory Authority (Nepra) to reach an agreeable formula to finalise the rates.
Sources in Sindh Mines and Mineral Development Department told Business Recorder here on Saturday that Nepra is opposing the idea of fixing upfront tariff on power production through coal-fired projects.
President Pervez Musharraf had constituted a two-member committee on July 20, 2007 to finalise the tariff on electricity that would be generated through coal-based power plants in Thar and other provincial coal fields. The committee comprises Sindh Mines & Mineral Development Minister Irfanullah Khan Marwat and Mukhtar Ahmed of Nepra to decide the tariff.
Sources said that if the upfront tariff is fixed then the rate of foreign as well as local investment would grow drastically in coal-based projects. At present, tariff is decided after the completion of feasibility report of any proposed project due to which at least two firms have left the project before completion despite spending million of dollars on them.
The firms include Shunhua Group of China which was constructing two 350 MW power plants in Thar and one local firm AES Limited which was working on a 1000 MW power project. Sources said that the tariff between eight and 10 cents per KWH on the future power projects would be suitable while Nepra is opposing the proposed rate.
Marwat ha said that the upfront tariff would be decided by the end of August or in the beginning of September. Without chalking out any decisive policy on tariff rates it would be very difficult to attract more investment in power projects, he said.
Sources hinted that resistance of Nepra on fixing upfront tariff might be because of the pressure of Water and Power Development Authority (Wapda). Shenhua Group before leaving the two power plant project held Wapda responsible saying it backed out the already decided tariff rate. Despite facing such type of impediments, the upfront tariff would be decided as Sindh government is making all-out efforts for this purpose, they hoped.
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