The National Electric Power Regulatory Authority (Nepra) has resolved to discontinue the use of dollar-based indexations for the Haveli Bahadur Shah, Balloki, Northern Power Generation Company Limited (NPGCL), and Central Power Generation Co. Ltd (CPGCL) power plants, in favor of transitioning to rupee-based indexations fixed for the entirety of their operational lifespan.
According to a report by The News, this decision is projected to yield savings of Rs1.6 trillion over the remaining operational life of these projects.
Nepra convened a public hearing on Thursday at its Islamabad offices, chaired by Waseem Mukhtar. The hearing focused on discussions regarding tariff adjustments for the Haveli Bahadur Shah, Balloki, NPGCL, and CPGCL power plants.
The objective of this strategic adjustment is to mitigate tariff volatility and foreign exchange exposure for consumers. Further reforms include reducing the indexation for Operations and Maintenance (O&M) costs from 100% to 70% of the rupee’s devaluation.
Local O&M expenses will now be indexed to either 5% or the 12-month average of the National Consumer Price Index (NCPI), whichever is lower.
Moreover, the return on equity (ROE) structure has been streamlined. Power plants will now receive 35% of the ROE as a fixed component, with the remaining 65% directly tied to the actual operation of the plant – a significant shift from the previous model of a 100% guaranteed ROE.
A press release states that these prudent measures are expected to result in a projected saving of Rs1.6 trillion over the lifetime of the projects, including Rs22 billion in the current fiscal year alone.
