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NEPRA all set to approve upfront tariff

The National Electric Power Regulatory Authority (NEPRA) has finally decided to determine the upfront tariff for power generation from coal and proposed a levelised upfront tariff, ranging in between Rs8.9359 per unit to Rs12.9589 per unit for different capacities.

The regulator would hold a public hearing on May 8 to approve the proposed tariff.

On the basis of the proposal for upfront tariff submitted by the Private Power and Infrastructure Board (PPIB) and the information otherwise available, NEPRA has proposed a tariff of Rs12.9589 per unit for a plant having a capacity of 200MW using local coal and local financing, while plants having foreign financing would have a tariff of Rs10.8786 per unit.

Tariff for the similar capacity plant using imported coal and local financing is proposed to be Rs11.2901 and Rs9.3874 per unit for foreign financed plants.

NEPRA has proposed a tariff of Rs12.8991 per unit for a plant having a capacity of 600MW using local coal and local financing, while the plants having foreign financing would have a tariff of Rs10.7096 per unit.

Tariff for the 600MW plant using imported coal and local financing is proposed to be Rs11.106 and Rs9.136 per unit for foreign financed plants.

The proposed tariff is Rs12.8223 per unit for a plant having a capacity of 1,000MW using local coal and local financing, while plants having foreign financing would have a tariff of Rs10.5424 per unit.

The tariff for the similar capacity plant using imported coal and local financing is proposed to be Rs10.9763 and Rs8.9359 per unit for foreign financed plants.

The above tariffs have been proposed at a 60 percent plant factor and would be applicable for projects achieving financial closure before December 31, 2014. The tariff models for the local coal excludes Thar coal for which a separate tariff mechanism is required, owing to certain costs particular to Thar coal projects, including development surcharge, etc, that would be devised in due course of time.

The proposed construction period is 40 months for 200MW plant and 48 months each for 600MW and 1,000MW plants, according to the information.

Internal rate of return (IRR) on equity is proposed to be 20 percent for local coal projects and 17 percent for imported coal projects, it revealed.

These tariff models have been worked out on 30 years project life and financing is based on 100 percent local loan and 100 percent foreign loan, respectively. The tariff once approved will be applicable after achieving the commercial operation along with the allowed indexations and escalations.

The upfront tariff will be reviewed and revised quarterly on the basis of indexations and escalations, it said.

The eligible companies will also be given coverage against the indexations and escalations during the construction period of the project.

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