ISLAMABAD, Oct 13: The government is expected to restrict the role of the National Electric Power Regulatory Authority (Nepra) in tariff setting for new power projects to reduce a six-month delay in the approval process.

Official sources told Dawn that the proposal was forwarded by the Water and Power Development Authority (Wapda) on the ground that since actual tariff has to be determined through international competitive bidding and accepted by the power purchaser (Wapda or the Karachi Electric Supply Corporation), a six-month approval stage for the proceedings of Nepra was unnecessary.

An alternative now under consideration suggests that tariff for new projects should be agreed between the power purchaser and the producer and approved by the Private Power and Infrastructure Board (PPIB) as a one-window operation.

However, since Nepra has statutory role under the Nepra Act to regulate tariff, issue generation and distribution licences, it would be entrusted to predetermine tariff limits for different types and sizes of projects for different regions.

Furthermore, Nepra would also predetermine the bulk supply tariff regime in consultation with various stake-holders, Wapda and the provincial governments. On the basis of such predetermined bulk tariff, Nepra would provide concurrent approval of the projects as part of the letter of support to be used by the PPIB or the provincial governments.

Wapda, being the power purchaser, is insisting on a three-part tariff, consisting of a capacity payment charge to be paid against the firm capacity of the plant and two components of energy payment during peak and off-peak demand periods.

However, if this was not workable, the level of capacity payment between 3-5th and 2-3rd of the total tariff should be maintained until repayment of major loans and debt servicing instead of the full term of the agreement.

Another proposal that model power purchase agreements (PPAs) should be prepared by Wapda in consultation with the board but those should be governed by laws of Pakistan instead of the laws of England as specified in the PPAs of IPPs under the previous policy.

Wapda has suggested that all the tax exemptions should be maintained for the new private projects as well as projects built in the public sector or in public-private partnership.