05 February 2005	Saturday	25 Zilhaj 1425

ISLAMABAD, Feb 4: The tariff committee constituted by the prime minister has decided to announce a revised tariff for Wapda consumers on Monday and empowered the National Electric Power Regulatory Authority (Nepra) to supervise international competitive biddings for setting up future power projects.

The decisions to this effect were taken at a meeting presided over by Water and Power Minister and head of the committee Liaqat Ali Jatoi and attended by chairmen of Nepra and Wapda, managing director of Private Power and Infrastructure Board (PPIB) and an additional secretary of the ministry of finance.

This broadly put to an end a longstanding dispute between the power ministry and Nepra over the implementation of the 2002 power policy that was considered to be a major hurdle in attracting fresh investment in the power sector as the country faced power shortfalls.

The meeting decided that all future power projects and their tariffs would be set up through international competitive bidding (ICB) and their power purchase agreements (PPAs) would be based on the entire life of the project.

This means 15-20 years of PPA for thermal projects and 25-35 years for hydel and coal-fired projects. The meeting decided that the transaction process for holding the ICB for new power projects would be carried out by the PPIB in consultation with the ministries of water and power and finance, the relevant utility and Nepra.

The actual bidding for both the project tariff and cost of the project would be supervised by Nepra and the lowest tariff so offered by investors would be acceptable to all, including Nepra.

These decisions were reached to give maximum clarity, confidence and comfort to the new investors to bid for all future projects, particularly the three projects of 1400-mw capacity being offered to international investors during a process starting from Feb 19 in Dubai and London.

It was also agreed to by the committee that Nepra would approve tariff for all the new projects for a period for which the investors would provide advance plans of cash flow, loan repayment schedule and other technical details. So investors providing maximum details would get a long-term tariff.

The meeting also decided that transmission line from a new power project to the national grid would be constructed by the relevant distribution company or the national transmission and dispatch company for the time being.

It would be decided by the ministries of finance and water and power just how to finance these transmission lines but the private power producer would have no responsibility in this regard as earlier demanded by Nepra.

The committee decided to meet again on Monday morning to give clearance to Nepra to announce a comprehensive tariff review for Wapda consumers and decide which consumer categories it wanted to exempt from tariff increase.

The sources said that Nepra had finalized its calculations about tariff revision under the comprehensive tariff review involving fuel adjustment, reduced hydel power generation and the impact of subsidy factor to keep the price uniform for all power companies.

The sources said that Nepra's calculations suggested an average 10-15 paisa per unit increase in tariff from the tariff it had reduced last month but slightly lower than the existing applicable tariff if Wapda companies' losses were taken at 15 per cent.

However, if the government decided to accept 20 per cent losses of Wapda companies as prudent cost, then the average tariff would be slightly higher than the existing applicable tariff. So a final decision to this effect would be announced after a meeting of the ministries of finance and water and power and Nepra.

An official statement quoted power minister Liaqat Jatoi as saying that all possible steps would be taken for confidence-building of investors and to attract investment in the power sector.