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Punjab loses out on upfront tariff for small hydropower projects

The non-serious attitude of Punjab Power Development Board (PPDB) has deprived the province of the upfront tariff for small hydropower projects. In a recent decision, the National Electric Power Regulatory Authority (Nepra) has dismissed PPDB’s tariff petition due to its continued lack of interest and failure to provide required information. The PPDB had filed a tariff petition before Nepra on April 27, 2012 for approval of upfront tariff for small hydropower projects at different potential sites in the province. Nepra scheduled a public hearing in this regard on October 4, 2012 but the PPDB asked for it to be postponed for at least one month. The Authority, being cognisant of the fact that the matter is of prime importance for the country’s energy sector, advised the PPDB to convey a new date for a public hearing. However, the PPDB failed to communicate anything regarding the scheduling of hearing despite numerous written and telephonic reminders by the Authority. Nepra feels that the PPDB is not interested in the processing of its petition for approval of upfront tariff for small hydropower projects in Punjab. According to Nepra Tariff (Standards & Procedure) Rules, 1998, the Authority has a stipulated period of four months to decide upon a petition. Under the tariff rules, it can extend this period for a further four months. Despite the expiration of the processing period, the Authority provided ample opportunity to the PPDB by extending the processing period up to the maximum allowed period of eight months. PPDB’s tariff petition has now been dismissed. Hence the upfront tariff for small hydropower projects has not been approved. Small hydropower projects are especially suitable for less developed countries technologically and economically. Nepra notes in a recent report that in order for the price of electricity to be affordable, a proper energy mix is imperative. Over the years, the generation mix, which was earlier in favour of cheap hydro electric power, has deteriorated substantially. At one time, the contribution of hydel energy was around 65 percent in the overall energy mix of the country, which has now decreased to only 29.15 percent, totally disturbing the energy mix leading to an increase in the consumer end tariff. “At present, the energy mix is heavily skewed in favour of thermal generation, which is mostly based on imported furnace oil. This not only leads to higher inflation but also jeopardises the competitiveness of the country’s industry in the international market,” the report added. Nepra has stressed that efforts should be expedited to reverse the energy mix towards cheaper hydro and coal resources.

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