ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved a Power Division proposal to extend power purchase agreement with Iranian firm M/s TAVANIR for import of 104 MW electricity on the basis of existing tariff, official sources told Business Recorder.

Sharing details, the sources said in order to meet the electricity demand of Makran Division, Wapda and Power Generation & Transmission Management Company, Iran (TAVANIR) entered into a contract on Nov 06, for a period of 30 years for sale and purchase of 32MW electricity. Tariff was agreed at cents 3 /kWh for an initial period of three years. Quantum of import of electricity from Iran was subsequently enhanced to 39 MW in 2006, 74 MW in 2010 and 104 MW in 2016.

Tariff of the energy supplied was revised at different time intervals and in this regard following five amendments have already been made to the contract so far and FCC of the Cabinet has also granted approvals of these amendments: (a) amendment No. 1- August 14, 2006 tariff was revised to $ 0.05 per kWh for a period of three years up to December 31, 2008 and capacity was enhanced to 39 MW;(b) amendment No 2 - June 18, 2010;(I ) effective from January 1, 2009 up to Dec 31, 2010 the tariff @ cents 6.25 per kWh;(ii) effective from Jan 1, 2011 till Dec 31, 2013, the tariff was based on the following formula: R=2.5+ 0.07 x Pi where P is monthly average crude oil price ranging from $65 to $110 per barrel. By applying this formula the payable tariff will remain within the range of Cents 7.00 to 10.00/kWh.

(c) Enhancement of capacity up to 74 MW through Jackigur (Iran) - Mand (Pakistan) 132 kv transmission line. Amendment No. 3 - February 23, 2015, effective from Jan 1, 2014 till Dec 31, 2015, for a period of two years, the tariff to remain unchanged on the basis of formula agreed in Amendment No 2. However, the capacity was enhanced to 104 MW from January 2016. Amendment No. 4- March 25, 2016, effective from January 1, 2016 up to Dec 31, 2016, the tariff was agreed through amendment No 4, which is as follows: R = 2.5 +0.07 x P. where P is monthly average crude oil price ranging from $51.5 to $ 100 per barrel. However, the tariff will remain within the range of 6.10 to 9.50 cents/ kWh.

Amendment No 5- March 15, 2019, effective from Jan 1, 2017 till Dec 31, 2019, the tariff remained unchanged based on formula agreed in amendment No.4. It was also agreed that electricity price shall be paid by the buyer (CPPA) in Euros. However the seller (TAVANIR) can request the buyer to pay the equivalent amount in other agreed currencies including in Pak Rupees in Pakistan in their nominated accounts and for that purpose parity of exchange rates issued by European Central Bank, International Monetary Fund and National Bank of Pakistan as the case maybe will be used. M/s TAVANIR also consented for novation from NTDC to CPPA as power purchaser.

On Oct 28, Power Division further noted that a delegation from TAVANIR, Iran visited Pakistan from 28th to 30th Jan. Another amendment No 6 on Jan 29, was signed for extension of similar tariff agreed in amendment No 5 from Jan 01 up to Dec 31 along with other related matters. It was also agreed that parties will finalize and conclude the detailed mechanism regarding late payment penalty concept in the subsequent amendment No 7.

Further, the contract and all amendments thereto would be governed, construed and interpreted in every respect in accordance with laws of England and any dispute arising from or related to the present contract and its amendments shall be referred to and settled by London Court of International Arbitration (LCIA). England.

CPPA Board of Directors in its meeting held on March 19, 2020 accorded its approval for amendment No 6 of Jan 29, for extension of tariff effective from Jan 1 to Dec 31, 2021 and other related matters and allowed Chief Executive Officer, CPPA to approach Nepra for determination of tariff for execution of amendment No 6. Pursuant to Rule 7 of Nepra Interim Power Procurement, (Procedures and Standards) Regulations, 2005 of March 16, 2005 wherein cases of import of power need to be filed with Nepra after approval of GoP. However, before approaching Nepra for approval of the tariff, approval of ECC regarding amendment No. 6 between CPPA and TAVANIR was required.

Power Division requested the ECC for approval of amendment No.6 signed between CPPA and TAVANIR, Iran and to allow Central Power Purchasing Agency (CPPA) to approach Nepra for tariff determination.

The ECC approved the amendment number 6, which will be ratified by the federal cabinet scheduled to meet tomorrow.

Copyright Business Recorder, 2020