ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has disposed of a review motion of Star Hydro Power Limited (SHPL) regarding 147MW Patrind Hydro Power Plant besides slashing the insurance component at the commercial operation date (COD) stage to be utilised for all subsequent annual adjustments of operational insurance.
According to details, the authority granted permission to the CPPA-G for procurement of power from Patrind Hydropower Project on September 29, 2008, and thereafter, approved the levellised feasibility stage tariff of Rs4.8223/kWh (US cents 6.1042/kWh) at reference exchange rate of PKR 79 per US dollar) vide decision dated February 13, 2009. SHPL has set up 147MW Patrind Hydro Power Plant (the project) in the territory of Azad Jammu and Kashmir (AJ&K).
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The authority on January 27, 2012, under Regulation 5(6) of TPPR, approved the Power Purchase Agreement between the CPPA-G and the SHPL for the procurement of power from Patrind Hydropower Project, at a negotiated tariff of Rs7.0496/kWh (US cents 8.2936/kWh at US$/PKR exchange rate of Rs85.0) levellised over a period of 30 years starting from COD.
A modification petition was also filed by the SHPL on August 16, 2018, concerning an increase of $7.872 million in the project cost (advisory cost, company cost, IDC, security cost, environment and social cost) due to certain conditions, circumstances and requirement by the provincial governments. A decision on the matter was issued by the authority on June 9, 2020. The modification petition filed by the CPPA-G on behalf of the SHPL was disposed of.
The CPPA-G, vide letter dated August 31, 2018, forwarded the petition for adjustment at the COD submitted by the SHPL for the 147MW Patrind Hydropower Project. The authority on July 29, 2020, determined the COD stage tariff for SHPL in pursuance to SHPL’s award of tariff at Rs8.3924/kWh (US cents 8.3170/kwh @ Rs100.91/US$)
The authority admitted the subject review motion and decided to hold a hearing, which was later held on October 13, 2020. Due to a change in the composition of the authority, it was deemed appropriate and necessary to rehear the matter, which was initially fixed for September 12, 2023; however, it was adjourned thrice on the request of the SHPL and finally held partially once on September 26, 2023, and reconvened on January 12, 2024.
Regarding the exclusion of the principal debt from the SHPL’s COD tariff as claimed in the modification petition dated July 13, 2022, the authority has reviewed the LCIA award and the judgment of the Lahore High Court (LHC) regarding the enforcement of the award.
The LHC has partly allowed the application of SHPL by recognising the award while deducting the amount at clause (d) of para 203 of the award.
Therefore, to the extent of payment of USD 16,452,807 being the principal debt damages plus interest at the delayed payment rate, the award has not been recognised or enforced. It has also been brought to the knowledge of the authority that SHPL has filed an intra-court appeal before the division bench of the LHC, which is pending adjudication.
Therefore, in the instant case, as of now, there is no enforceable award in the field regarding the award of principal debt damages. Once a conclusive and final decision with respect to the recognition and enforcement of the award is passed by the Court of apex jurisdiction, only then can the award to this effect be enforced.
Regardless, the authority is mindful of the fact that double benefit should not be extended to SHPL. This intent is also reflected in the award itself.
Therefore, the authority has decided that subject to the final decision of the pending litigation regarding recognition and enforcement of the LCIA award from a court of apex jurisdiction and in case the award is recognised, enforced and implemented to this effect, the principal debt repayment from SHPL’s COD tariff shall be excluded.
In light of the circumstances, the authority has concluded that the review motion submitted by SHPL does not necessitate any alteration to SHPL’s COD decision dated July 29, 2020, apart from permitting exchange rate variation on operational insurance, which has already been considered and allowed on July 29, 2020.
Furthermore, considering the discussion on operational insurance outlined the authority has decided that the Reference Insurance Component of SHPL at the COD stage of Rs175.0862/kW/M shall be replaced with Rs148.7869/kW/M, wherever appearing. Additionally, the authority has also decided that this COD stage reference component of Rs148.7869/kW/M shall be utilised for all subsequent annual adjustments of operational insurance.
Regarding the exclusion of the principal debt repayment from SHPL’s COD tariff in pursuance to LCIA award and as claimed under the modification petition dated July 13, 2022, the authority has decided that subject to the final decision of the pending litigation regarding recognition and enforcement of LCIA award from a court of apex jurisdiction and in case the award is recognised, enforced and implemented to this effect, the principal debt repayment from SHPL’s COD tariff shall be excluded from SHPL’s tariff.
Consequently, in light of the foregoing, the Nepra has disposed of the review motion. The order of the authority shall be notified in the official Gazette in terms of Section 31(7) of the Regulations of Generation, Transmission and Distribution of Electric Power Act, 1997.
Copyright Business Recorder, 2024