Daily Times

KARACHI: The National Electric Power Regulatory Authority (NEPRA) on Wednesday made minor alterations and turned down the review petition filed by Chinese Independent Power Producers (IPPs) against the decision of induction of security cost for the CPEC projects in the power tariff.

The authority while agreeing with the petitioners on one point, said the matter of $150,000/annum shall be dealt by Private Power Infrastructure Board (PPIB), Alternative Energy Development Board (AEDB), and Government of Pakistan (GoP).In its previous order, the Nepra directed the IPPs to pay $150,000/annum, subject to 3% indexation for each year after the 1st year from COD, directly to the relevant Ministry/Agency designated for the purpose during the construction period as well as during the operation period.

Last year, following the approval from the Economic Coordination Committee of the Cabinet, the Nepra had initiated suo moto proceedings in the matter and approved security cost in respect of each CPEC project on the basis of 1% of capital cost of the project reduced by $ 150,000/annum (subject to 3% indexation for each year after the 1st year from COD) and the same shall be treated as pass-through item.

However, electricity consumers in the country are already paying various kinds of charges like Neelum Jehlum power project surcharge, Pakistan Television Fee, circular debt interest payment surcharge and power cost recovery surcharge. Being aggrieved of the impugned decision, five CPEC projects had filed Motion for Leave for Review against the Nepra’s decision. The Nepra admitted the review motions filed by Zonergy, Hydrochina and UEP.Wind and hearing in the matter was held in January, 2018.

The interveners and commentators had opposed the decision and submitted that it would unfairly impact CPEC power projects.

“It is unclear yet which law enforcement agency and ministry will demand or receive this security cost”, asked Zonergy power.

Zonergy submitted that it never requested for additional security and was not liable to pay $150,000/annum. UEP Wind submitted that additional security under Article 5.4 of Implementation Agreement (IA) is a separate matter and it should not be factored in while calculating the security cost. UEP Wind submitted that Nepra has no jurisdiction to require the company to incur any additional cost based on its interpretation of the IA. According to UEP, NEPRA is not party to the IA, therefore, may not enforce the provision of the IA based on its interpretation. HDPPL submitted that the burden of the security cost should not be on the shoulders of the projects. The Ministry of Energy (Power Division), PPIB and CPPA (G) were requested to submit comments in the matter of above motions for leave for review. However, no comments were received in the matter, Nepra revealed.

The Authority has decided to replace the text contained in Para 7(i) of the decision dated August 3, 2017 in the matter of induction of security cost for CPEC projects in the power tariff to ensure security sustainability with “The matter of $ 150,000/annumshall be dealt with by GOP/PPIB/AEDB under the relevant Clause(s) of IA.”

The NEPRA, in its order,  said that in future, if the overall security situation improves and GOP considers that special security arrangement is no longer needed and the special security force/division is released from this responsibility, no payment shall be made by the power purchaser on account of special security arrangement.