The government is to allow cost adjustments to the power sector companies in Chinese currency, yuan, on the same pattern as that of dollar, pound sterling, euro and Japanese yen, well-informed sources told Business Recorder.
The Ministry of Water and Power is also incorporating changes in the Power Generation Policy 2002, according to which meaningful project comparison and a discount rate of 10 per cent would be used for tariff levelisation of both thermal and hydropower projects. These recommendations will be submitted to the Economic Co-ordination Committee (ECC) of the cabinet for approval.
According to the recommendations of a high level inter-ministerial committee, headed by the Secretary Water and Power, the ratio Capacity Purchase Price (CPP) in overall tariff of hydropower projects would be determined on case to case basis by National Electric Power Regulatory Authority (Nepra). Sources said, in the revised policy, 50 per cent of income generated through carbon credits of CDM will be spent on rehabilitation of the affected project areas in consultation with the provincial governments, while the remaining 50 per cent will be retained by the respective IPP.
Private power projects based on BOT model would be transferred to their respective provincial governments after completion of concession period. The Terms of Reference (ToRs) for the feasibility will be issued with the Letter of Interest (LoI) along with milestones for carrying out the feasibility study and compliance thereof would be monitored strictly.
The consultants hired/selected by the sponsors for carrying out feasibility study would either be on the pre-qualified panel of the Pakistan Engineering Council (PEC) or else on the pre-qualified panel of multilateral agencies and their performance would be judged by the Panel of Experts ((PoE) from their reports.
Hydro, coal and dedicated gas field based unsolicited projects would continue to be processed under the policy while oil-based unsolicited projects should not be entertained as a standard provision under the policy. In order to ensure that the sponsors of 'raw-site' projects move expeditiously with the subsequent steps for the implementation of the project, the government will take the following steps: (i) the period of Performance Guarantee (PG) validity for LoI will be increased till three months beyond the expected date for issuance of LoS by the PPIB.
In this regard a reasonable and mutually acceptable schedule will be decided and made part of the LoI.; (b) for hydel and coal projects, the maximum timeframe for approaching Nepra for feasibility level tariff determination will be three months after the approval of feasibility study by the POE appointed by PPIB, while for thermal/any other project required from EPC contract to be submitted for tariff determination, the timeframe will be 9 months; (c) after the determination of tariff or a revised tariff (in case of a review application is filed by the sponsors) by Nepra, the sponsors will have 30 days to submit the PG for issuance of LoS.
When this time period lapses, PPIB will have the right to encash the PG while on the other hand, if the sponsors convey their unacceptability of Nepra-determined tariff within 30 days, PPIB will return the PG and will have the right to offer the project for ICB as per the provision of section 4.4 of Power Policy 2002; and (d) if any extension in the validity of LoI is necessitated due to the time overruns from the LoI schedule on account of determination of tariff or revised tariff by the Nepra, the 2002 policy requirement of doubling of the PG for any such extension should be waived with the approval of PPIB Board.
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