ISLAMABAD: Disappointed by the power regulator\u2019s \u2018stubbornness\u2019, the government is planning to seek judicial intervention to jack up the consumer tariff of the controversial Nandipur power project by over 34 per cent in a bid to make it \u2018viable\u2019.
\nA senior government official told Media that the Ministry of Water and Power and power companies had exhausted all institutional and regulatory instruments to secure Nandipur\u2019s tariff on actual cost. The National Electric Power Regulatory Authority (Nepra) had blocked all avenues of tariff increase based on actual cost, even rejecting review and reconsideration requests.
\n\u201cWe have decided to go into appeal against the Nepra determinations before a high court,\u201d the official said, adding that \u201cnecessary instructions have been passed on to the Northern Power Generation Company Limited\u201d, which operates the Nandipur project, \u201cto complete formalities to move a high court at the earliest\u201d.
\nNepra has repeatedly turned down requests by the government and its power companies to assume the total cost of the 425-525MW Nandipur project at Rs65 billion while determining its tariff. But the regulator has considered the project cost at Rs42bn in a 30-year tariff that averages Rs11.64 per unit (kilowatt-hour).
\nThe government\u2019s desire could bring this tariff to Rs15.63 per unit \u2014 an increase of 34pc. The cost increase is being sought due to project delays, resultant cost overruns, penalties paid to contractors and the cost of laying a gas pipeline to carry imported re-gasified liquefied natural gas (RLNG) to the project site to run the plant at its full 525MW capacity.
\nThe power regulator has written time and again that it had allowed all prudent costs in the tariff, and that consumers could not be punished for the omissions or commissions of the project authorities. \u201cThe project delays and cost escalations are not the faults of the consumer,\u201d said a Nepra official.
\nSimilarly, there was no precedent to allow for the cost of a gas pipeline in the power tariff because the pipeline should be constructed by the gas company, treated as the gas company\u2019s asset and made part of the gas company\u2019s revenue requirement, he said.
\nThe government has claimed in its regulatory filings that the Nandipur project was non-viable at the given tariff of Rs11.63 per unit on the basis of the Rs42bn cost estimate.
\nNepra has tried to convince the government that the project could become viable if the government scales down its 15pc return on equity to 7.5pc. Also, the gas pipeline cost should be shouldered by the gas company, where it actually belongs.
\nThe regulator is of the view that allowing a cost overrun, project delays and pipeline costs in gas tariff could set a legal precedent for the private sector to claim cost increases, hence the government should not set a bad precedent to penalise innocent consumers and, instead, bear the additional cost out of its own budget and reduce its return on equity.
\nEarly this month, Nepra rejected a reconsideration request from the water and power ministry and declined to change its determined tariff. An official said the project had already incurred more than Rs12bn in losses at this tariff, which hardly covered the Rs35bn in project loans.
\nThe Nandipur plant has been in the limelight for more than five years because of inordinate delays, cost overruns and allegations of mismanagement, corruption and kickbacks. Nepra had earlier rejected a review petition filed by the generation company on Jan 29 this year that also sought to increase project cost by 55pc to Rs65bn.<\/p>\n","protected":false},"excerpt":{"rendered":"
ISLAMABAD: Disappointed by the power regulator\u2019s \u2018stubbornness\u2019, the government is planning to seek judicial intervention to jack up the consumer tariff of the controversial Nandipur power project by over 34 per cent in a bid to make it \u2018viable\u2019. A senior government official told Media that the Ministry of Water and Power and power companies […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-4279","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"\n