ISLAMABAD, Oct 14: The government is expected to restrict the role of National Electric Power Regulatory Authority (Nepra) in setting tariff for new power projects to reduce a six-month delay in the tariff approval process.

Official sources told Dawn that the proposal had initially been forwarded by Wapda on the ground that since actual tariff had to be determined through international competitive bidding and accepted by power purchaser (Wapda or KESC), a six-month approval stage for the proceedings of Nepra was unnecessary.

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

However, as Nepra has a statutory role under the Nepra Act to regulate tariff, issue generation and distribution licences, it would be entrusted with the task to pre-determine tariff limits for different types and sizes of projects for different regions.

Nepra would also pre-determine the bulk supply tariff regime in consultation with various stake-holders, Wapda and the provincial governments. On the basis of such pre-determined bulk tariff, Nepra would provide concurrent approval of the projects as part of the letter of support to be used by PPIB or 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 is not workable, then 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.

Federal government sources said that the question required further discussion.

Another proposal is that model power purchase agreement be prepared by Wapda in consultation with the PPIB, but these PPA be governed by the 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, including import license fee available to generation companies and income tax exemption for lenders, provided under the 1994 power policy for lenders, should be maintained for the new private projects as well as the projects built in the public or public-private partnership. Also these concessions and exemptions should be covered through SROs for the full term of the project.

Wapda has also proposed that a water use charge should be specified in local currency, besides an equivalent rupee value of about Rs0.15 per unit as water use charge should be specified and kept constant throughout the term of the agreement.