MONDAY FEBRUARY 23: RLNG plants: Nepra is all set to hear PPIB petition today

ISLAMABAD: National Electric Power Regulatory Authority (Nepra) is all set to hear a petition of Private Power Infrastructure Board (PPIB) on Monday (today) to consider upfront tariff of 10.1269 cents for new Re-gasified Liquefied Natural Gas (RLNG) power plants at a tentative imported cost of $12 per MMBTU.
Well-informed sources told Business Recorder that the PPIB has submitted the working of upfront tariff at an estimated price of $10, $11 and $12 per MMBTU but whatever price the government will fix, would be considered as determining the upfront tariff.
The federal capital was abuzz with speculations that Pakistan and Qatar have cut a deal at $7 per MMTBU but a senior government official told Business Recorder in categorical terms that the price of LNG has not been finalised with Qatar or any other country so far.
Chief Minister Punjab Mian Shahbaz Sahrif recently met the Emir of Qatar in Doha and offered a price for LNG. "The government has not yet finalised RLNG price but I guess it will be between $8.5- 9 or less than $10 per MMBTU," he added. Recently, a senior official of Water and Power Ministry disclosed that Rs 8.85 per unit tariff has been suggested for electricity to be generated through LNG. Nepra has sought comments from interested parties as to whether the RLNG price of $12 per MMTBU is reasonable or justified.
Another official told Business Recorder that new RLNG-fired power plants will be set up after the second terminal is established at Port Qasim. LNG, import of which is expected to start in a couple of months, will be supplied only to existing power plants, he added.
He argued that prices will be determined by several other factors in the agreement which include size of vessel, offloading time, insurance etc. Qatar has sought answers to 84 questions from Pakistani authorities prior to reaching any agreement on LNG deal.
The PPIB in its petition has recommended Capex at $770 million each for local and foreign financing. Financial fees and charges on local and foreign financing have been proposed at $20.21 million whereas the amount of Interest During Construction (IDC) will be $108.63 million on local financing and $38.68 million on foreign financing. One month escrow account amount for LNG is estimated to be $34.49 both for local financing and foreign financing. The entire calculation indicates that estimated cost through local financing of LNG fired power plants will be $933.33 million whereas in foreign financing project cost will be $863.39 million.
Other assumptions are as follows: (i) gross capacity at the mean site condition is 825.806 MW(net 800 MW);(ii) customs duties and cess @ 5.95 per cent of the 66.75 per cent of the capital cost;(iii) debt equity ratio 75:25;(iv) interest on local loans at kibor 9.95+ 300 basis points and for foreign loans Libor 0.2556 per cent and 450 basis points;(v) IRR on equity of 15 per cent;(vi) net LHV efficiency of 57 per cent in combined cycle mode;(vii) LNG price of $12 / MMBTU(LHV);( viii) fixed O&M of Rs 0.1237 per unit;(ix) insurance during operational phase at 1.35 per cent of the EPC cost;(x) cost of working capital of Rs 0.1198 per unit;(xi) exchange rate Rs 99.675/$;( xii) construction period 28 months;(xiii) grace period 28 months ;(xiv) loan repayment period 10 years in equal quarterly instalments;(xv) availability as per standard the PPA of the CCGT power plants under 2002 Power Policy;(xvi) nominal plant factors of 60 per cent and 92 per cent for calculation of tariff; and (xvii) tariff control period 30 years.
If the plant factor is considered 92 or 60 per cent, fuel component at local and foreign financing will be Rs 7.1619 per unit whereas variable cost has been assumed at Rs 0.1521 per unit and energy charges Rs 7.3141 per unit. Capacity charges on 92 per cent plant factor and local financing have been calculated at Rs 2.2895 per unit, foreign financing Rs 1.8130 per unit and on 62 per cent plant factor and local financing capacity charges will be Rs 3.5106 per unit and on foreign financing Rs 2.7799 per unit.
Levelized tariff on 92 per cent plant factor and local financing has been recommended at Rs 9.6036 per unit and on foreign financing Rs 9.1271 per unit while on 62 per cent plant factor and local financing Levelized tariff is estimated at Rs 10.8247 per unit. On foreign financing Levelized tariff is calculated at Rs 10.0940 per unit.
According to the petition, Levelized tariff on 92 per cent plant factor and local financing has been calculated at 9.6349 cents per unit and on foreign financing 9.1569 cents. On 62 per cent plant factor and local financing Levelized tariff has been calculated at 10.8600 cents per unit and on foreign financing 10.1269 cents per unit.
Nepra has framed the following issues for hearing: (i) whether RLNG price of $12/MMBTU is reasonable and justified; (ii) whether project cost is reasonable and justified ;(iii) whether the cost of one month escrow account is justified;(iv) whether the proposed new LHV efficiency level is reasonable;(v) whether working capital cost is justified ;(vi) whether insurance cost at 1.35 per cent of the EPC cost is justified; and (vii) whether the IRR on equity of 15 per cent is reasonable and justified.