Private Power & Infrastructure Board (PPIB) is all set to scrap 500MW Chakothi-Hattian hydropower project in case sponsors fail to move ahead within a specified time, well-informed sources told Business Recorder.
Managing Director PPIB, Shah Jahan Mirza, in a recent meeting of the Board, revealed that an LoI was issued to M/s Suhail Jute Mills Ltd on December 24, 2007 for development of the 500 MW Chakothi-Hattian Hydropower Project in district Hattian (AJ&K) on Jhelum river. The feasibility study of the project was approved by a Panel of Experts (PoEs) on April 11, 2011 and subsequently, (the project being located in AJ&K) the sponsors approached WPPO/ NTDC for negotiation of a feasibility level tariff, as per the provisions of the Power Policy, 2002.
The Board was further informed that the NTDC after negotiations, accepted the feasibility level tariff of 7.896 cents /kWh and forwarded it to Nepra (on November 26, 2012) for approval. Nepra (on January 30, 2014) approved a tariff of 6.52 cents/kWh, however, the sponsors, while considering the tariff to be on the lower side, submitted their review petition.
On October 16, 2014 Nepra announced its decision on the review petition, slightly enhancing the feasibility level tariff to 6.57 cent/kWh. Subsequently, PPIB, on December 1, 2014, requested the sponsors to fulfil the prerequisites for issuance of a Letter of Support (LoS); however, the sponsors instead filed a writ petition in court against the feasibility stage tariff determined by Nepra. The petition is pending since November 19, 2014 and no material proceedings have yet taken place; nor has the court passed any directions.
The MD PPIB explained that the major difference in the NTDC and Nepra-determined feasibility level tariff is in the cost of civil works, land acquisition and resettlement, owner advisors/consultant fees; insurance, fixed and variable O&M costs. PPIB, once again, on June 26, 2015, requested the sponsors to fulfil the prerequisites for issuance of LoS. The company through its letter of July 13, 2015, however, forwarded its concerns on the feasibility level tariff announced by Nepra and requested for an opportunity to present its viewpoint to Nepra. Meanwhile, Nepra through its letter of April 28, 2016, highlighting the inordinate delay in the execution of hydropower projects, including the Chakothi-Hattian project, requested PPIB to explore other options for implementation of the project.
The Board maintained that tariff determination and announcement of tariff are the mandate of Nepra which has already been concluded; however since the sponsor has filed a lawsuit against Nepra, PPIB should not indulge in the process and a final notice may be served to the company to proceed with the project by obtaining an LoS for achievement of other relevant milestones.
After a detailed discussion, the Board presided over by the Minister for Water and Power, Khawaja Asif, advised the PPIB to serve a final notice to the project sponsors to move ahead and in case no progress is achieved by the sponsors within a specified time, the project may be cancelled and re-advertised under the Power Policy 2015; and the audited cost of the feasibility study earlier carried out by the project sponsors may be reimbursed by the new sponsors as per the policy.
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