ISLAMABAD, June 25: With about 1700-mw estimated power shortfall in three major cities (of Punjab) by January 2,007, the National Electric Power Regulatory Authority has allowed the setting up of two 420-mw thermal plants at a tariff that goes up to 14.5 cents per unit (Rs8.715 per unit).

The decision practically revises the much criticized 1994 power policy that had envisaged loan repayments on a front loaded basis resulting in higher tariffs in the first 10 years.

There has been no addition in the power generation capacity for the last 20 years other than those committed under the 1994 policy that had offered an across the board upfront tariff of 6.1 cents per unit and added more than 3,000-mw power generation capacity.

The new rates have been approved in two separate determinations for 209-mw Saif Electric (SEL) and 215-mw Sapphire Electric Company (SECL).

The average consumer tariff at present is about Rs4.10 per unit.

Nepra acknowledged the National Transmission and Dispatch Company’s estimates that Wapda’s distribution companies of Lahore, Faisalabad and Gujranwala would face an overall shortfall of 5250-mw in peak winter days i.e. January 2007.

The NTDC, a corporate company of Wapda, is responsible for purchasing power from generation companies and selling it to distribution companies.

Of it, about 3,580-mw power needs will be met through excess generation in the southern areas, leaving a shortfall of about 1,700-mw, including about 1,000-mw shortage in Lahore alone.

There will be another shortfall of about 5,500-mw in 2,010, says Nepra in one of the two determinations.

These shortages are other than those currently being faced in Karachi and estimated at more than 1,300-mw in 2,007.

Under policy directives of the federal government, Nepra has approved a tariff of Rs8.7 per unit (13.716 cents per unit) to 230-mw SECL for diesel-based power generation for 10 years, to be sold to the Central Power Purchase Authority on behalf of Lahore, Faisalabad and Gujranwala electric supply companies.

The SECL project, to be located in Muridke near Lahore, will have an estimated cost of $185 million and will be a combined cycle plant, with gas as base fuel and diesel as alternative fuel.

The diesel-based tariff for 11-30 years has been calculated at Rs7.4 per unit. As such, levelised tariff over 30-year life of the project has been allowed at Rs8.23 per unit.

The project will run on natural gas on a nine-month basis until 2,010, after which, the government or gas supply companies do not offer any commitment for gas availability.

The gas-based power tariff for the SECL has been approved at Rs4.03 per unit for first 10 years and Rs2.7 per unit for next 20 years. As such, levelised tariff for 30 years will come to about Rs3.6 or 5.95 cents per unit.

Fuel, interest rate and taxes will be pass through items in the tariff.

Nepra has allowed the SEL to sell its diesel-based power to the CPPA at Rs8.7152 (14.53 cents) per unit for first 10 years and Rs7.3 (or Rs12.15 cents) per unit for next 20 years. As such, levelised tariff over 30-year period for the $184 million project will stand at Rs8.219 (13.7 cents) per unit.

The SEL’s gas-based tariff has been calculated at Rs4.1 (6.8 cents) per unit for first 10 years and Rs2.63 (4.4 cents) per unit for next 20 years, putting the 30-year levelised tariff at Rs3.6 or 5.9 cents per unit. The SEL project will be located in Qadarabad near Sahiwal and deliver power to Lesco, Fesco and Gesco.

Nepra has already determined a new upfront tariff on the guidelines of the federal government that wants to meet on emergent basis the looming power shortfall in 2007 in the wake of economic growth in specific areas where shortages are very clear.

Nepra sources said the new tariff was a slight departure from the 2002 power policy and revival of the 1994 policy.