The Planning Commission has suggested to the government to keep the Private Power Infrastructure Board (PPIB) away from scrutinising feasibility studies of thermal power projects, as it has also grilled investors like Nepra and Wapda, it is learnt.
"The PPIB should have no concern with the standard of feasibility study, cost and technology, in the interest of investors as they prepare projects as per international standards to seek lending. So, screening of feasibility studies at PPIB be dispensed with for thermal power projects," the Commission commented while reviewing a summary on the guidelines for determination of tariff of IPPs.
It said that if the sponsors would not prepare suitable feasibility studies, they would not be able to secure debt financing, as the lenders have their own due diligence procedure for financing the projects.
"In case the investors do not get financing within the stipulated time, specified in the LoS, financial close will not be achieved and performance guarantee will be forfeited," the Planning Commission argued.
The Commission said that a timeframe should be indicated in LoI for completing all prerequisites for the issuance of LoS and investors should not need knocking at the doors of PPIB again and again during the validity period of LoI.
It observed that there was no philosophy to negotiate the overall levelised tariff, and added that it could have been a better approach if the tariff was negotiated only on CPP and not captured effectively. Investors would bring inefficient plant which would be harmful to the economy at large, and the consumers in particular.
The Economic Co-ordination Committee (ECC) of the Cabinet had approved the guidelines, in its previous meeting, but there were still differences between PPIB and Nepra on some proposals, one of which according to the documents was the bar on the regulator to re-determine tariff once it has finalised.
The Ministry of Water and Power had suggested that once a tariff has been finalised, either through competitive bidding or offering upfront benchmark tariff, it should not be subjected to further review by Nepra.
The Central Board of Revenue (CBR) in its comments had said that additional incentives provided to the investors should be given "without altering tax collection mechanism and burden on shareholders income".