PESHAWAR, Jan 5: The National Electric Power Regulatory Authority (Nepra) is likely to allow the Malakand-III hydroelectric project an upfront tariff of 5 US cents a unit. The NWFP government had recently asked the authority to revise the tariff to 5.89 cents.

A formal decision is expected shortly, an official told Dawn.

The issue of tariff determination for the project has been lingering on for the past two years because of differences between the Water and Power Development Authority (Wapda), the buyer and the NWFP government. Initially, the Wapda had offered to buy electricity at 3.2 US cents a unit, while the NWFP government had demanded a unit price of 4.7 US cents in line with the Federal Hydel Policy of 1995.

The Economic Coordination Committee in its meeting on Oct 31, 2007 had awarded an upfront price of 5.89 cents a unit for three private sector hydel power projects. These projects are the 84-megawatt New Bong Escape Project, 132MW Rajdhani power project in Azad Kashmir and 84MW Matiltan Project in the NWFP.

All three projects are being set up under the 1995 Hydel Power Policy.

The federal government had justified the decision on the grounds that tariffs under the 1995 policy were based on projections of the time and they had not been revised to take into account escalation in production costs since then.