Daily Times

KARACHI: The National Electric Power Regulatory Authority (NEPRA) has reportedly allowed the Central Power Purchasing Agency (Guarantee) Limited (CPPA-G) to charge market operation fee (MOF) from the National Transmission and Despatch Company Limited (NTDCL).

The CPPA-G had filed a petition with the NEPRA for determination of market-determined fee for three years starting from 2015. As a result, the authority has approved the CPPA-G request with some modifications. The approval of the MOF will result in increased power tariff.

According to the petition, CPPA-G had requested the market operation fee at the rate of Rs 0.0064 per KWh (equivalent to Rs 2.08 per KW per month) for the month of June, 2015; Rs 0.0061/KWh (equivalent to Rs 2.66 per KW per month) for financial year 2015-16, and Rs 0.0142/KWh (equivalent to Rs 6.17 per KW per month) for 2016-17.

“The CPPA-G is allowed to recover its assessed tariff for the month of June 2015 and for the FY 2015-16 from the NTDCL,” NEPRA said in its order.

The authority notified on Friday that the CPPA-G, for provision of market operation and allied services, was allowed to recover its assessed tariff for FY2016-17 at Rs 2.5191/kW/month. Since the amount of capital expenditure (CapEx) of Rs244.35 million has been allowed only for a period of one year, the MOF of Rs 2.5191/kW/month shall be applicable only for a year from the date of its notification. The applicable MOF shall be Rs 1.4610/kW/month, instead of 2.5191/kW/month, if the tariff remains notified beyond a period of one year, it added.

After the approval of the MOF, the CPPA-G will cover its expenses through the approved MOF, independent of the use of system charge (UoSC) of the NTDCL. The CPPA-G in its market operation fee petition had requested for: capital expenditure requirements for implementation of Enterprise Resource Planning (ERP) for back office automation, other software and procurement of associated cost for licensing of software and hardware, including the networking infrastructure; capital expenditure expenses relating to management trainees; additional operating and capital expenses required for office space of CPPA-G; and the cost of replacement and new vehicles as per the company policy. The authority, considering the fact that the CPPA-G is a non-profit organisation, currently having cash flow constraints and may not be able to finance its allowed CapEx from banks, has decided to include the allowed CapEx on an upfront basis in its revenue requirement, to be recovered by the CPPA-G until June 2017 through its MOF.

“Since the CapEx is being allowed upfront and as one off payment, hence no deprecation and ROLM on these assets will he allowed. The amount of CapEx is only being allowed for a period of one year. Once the amount of CapEx is recovered by the CPPA-G, the tariff shall be revised downward, ie component of CapEx cost will be excluded from the tariff,” NEPRA added.