ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Thursday approved a maximum of Rs8.32 per unit upfront tariff for small hydropower generation projects (up to 25MW installed capacity).

The upfront tariff for small hydropower projects was offered under Section 31 (4) of the Regulation of Generation, Transmission and Distribution of Electric Power Act 1997.

The power regulator said it had allowed Rs8.32 per kWh for low head power plants having foreign finance and plant factor of 65 per cent and below.

Likewise, high head plants with foreign financing and plant factor of 50pc and below have been offered Rs7.62 per unit.

Hydropower is recognised as an environment-friendly source of energy required for self-reliance and overcoming power crisis besides providing carbon credits from the UN.

Small hydropower projects are considered a viable source in Pakistan as they do not require building of large dams and do not pose problems of deforestation, submergence or rehabilitation.

However, sponsors of such projects have been facing interface problems from the government owned power companies because of their reluctance to build transmission lines.

The Nepra said comparatively small capital investment and short gestation periods are required to complete these projects and hence it had also provided an ease of doing business to small investors with procedural improvements.

The upfront tariff is introduced with an objective of simplifying the tariff process, providing certainty to the potential investors, fast-tracking the development of commercially attractive small hydropower sites, allowing material risk coverage to the investor.

The economic attractiveness of the upfront tariff was further enhanced as the tariff will be adjusted for each site depending upon the plant factor. The upfront tariff would facilitate in reducing the project development period considerably.

Simultaneously, while considering issues faced by small hydropower projects in evacuation of electricity, the regulator also decided that small hydropower generation companies would have the option to sell electric power to either central power purchase agency or national transmission and dispatch company on behalf of distribution companies at any voltage level or to the relevant distribution company at 132 kV or below.

In order to provide clarity on the matter, the regulator has notified the National Electric Power Regulatory Authority (Sale of Electric Power by Renewable Energy Companies) Guidelines, 2015, which are also applicable to small hydropower projects of 50MW or less capacity.

Published in Dawn, April 3rd, 2015

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