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Nepra approves tariff for bagasse power projects

The National Electric Power Regulatory Authority (Nepra) has determined and approved the upfront tariff for new bagasse based ectricity generation projects, official documents revealed.

The rate determined for delivery of electricity to the power purchaser is Rs11.7396 per unit for the first 10 years and Rs7.914 per unit for the next 20 years.

The reference tariff is applicable for 30 years from commencement of commercial operation date and is applicable for new co-generation projects based on bagasse.

Additionally, there is no maximum or minimum cap on the installed capacity by the co-generation projects. Moreover, the option for accepting upfront tariff will be applicable for one year from the date of approval of tariff by the Authority.

Project sponsors are expected to achieve commercial operation date within two years from the date of grant of upfront tariff.

Furthermore, sponsors interested in availing the tariff are to submit an unconditional formal application to Nepra for approval by the Authority in accordance with the Nepra upfront tariff (Approval & Procedure) Regulations 2011.

The power purchaser and Alternate Energy Development Board (AEDB) will monitor project progress and ensure that all machinery is new and as per the latest IEC standards.

The projects recommended by the AEDB, whose plant and machinery is confirmed to be new and of acceptable quality by the AEDB, will be eligible for this tariff.

Companies that have the consent of the power purchaser for procurement of electricity along with a certificate from the power purchaser (that it will have the necessary infrastructure in place to evacuate all the power supplied by the applicant) will qualify for the tariff.

Moreover, power producers will have the option to offer energy to the respective distribution company or to the central power purchaser provided that the cost of inter-connection and grid station upgrades shall be incurred by the respective distributor or power purchaser, the official documents said.

The projects based on foreign financing may opt for the approved upfront tariff. However, the risk of currency exchange rate of foreign financing will be borne by the project sponsors.

In the upfront tariff, no adjustment for certified emission reductions has been accounted for.

However, upon actual realisation of carbon credits, the same shall be distributed between the power purchaser and the power producer in accordance with the Policy for Development of Renewable Energy for Power Generation 2006 as amended from time to time. According to official documents, co-generation projects may use other biomass fuel such as rice husk and cotton stalk in combination with bagasse or separately. However, use of coal is not allowed.

After a period of five years, the Authority may review the fuel pricing mechanism in accordance with Nepra Rules, if it is deemed that the existing mechanism is not representative of market realities.

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