ISLAMABAD, Jan 14: The National Electric Power Regulatory Authority (Nepra) has submitted to the cabinet division its final report on the 1000MW Thar power project that seeks finances for water supply by the Sindh government and offers an indicative tariff of 7.8 cents per unit for 30 years.

Nepra was directed by the cabinet’s Economic Coordination Committee last month to come up with an upfront tariff on coal-based power projects to meet the growing energy needs of the country. After consultations with all stakeholders, including the government of Sindh, Water and Power Ministry and Wapda, Nepra reached the conclusion that it could not offer an upfront tariff in the absence of a bankable feasibility study.

Therefore, it worked out an indicative tariff of 7.8 cents per unit based on experiences of India, Indonesia and some other countries. Nepra determined that water supply could not be made part of the power tariff and any expenditure on that account should be borne by the provincial government.

Moreover, Nepra said the indicative tariff would have no legal binding and a final rate to the investors would be worked out on the tariff petition to be filed by the project sponsor on the basis of a bankable feasibility study for which the government had issued a letter of interest. At a recent meeting presided over by the Minister for Water and Power Tariq Hameed, representatives of the Sindh government had opposed the tariff and proposed a 11.1 cents per unit tariff.

The Sindh government argued that normal laws should be set aside for the time being to promote investment in Thar coal reserves and a political decision was required to offer an attractive tariff. It contended that since the oil-based power projects were being contracted at a much higher tariff with an extra foreign exchange cost, Nepra should agree to a tariff for a domestic resource even if its tariff was higher in order to attract investment.

Sources in Nepra said it could not take political decisions on its own, since that was the domain of the government and the federal cabinet. Existing rules did not allow determining a tariff that was not based on prudent economic costs, they said.

Anything beyond that, said the sources, should come as a policy decision from the federal government.