National Electric Power Regulatory Authority Energy pvt... · 2020. 2. 25. · Proceedings Comments from Central Power Purchasing Agency (CPPA): 6. CPPA in its comments submitted

Registrar

National Electric Power Regula tory AuthorityIslamic Republic of Pakist:asr

2nd Floor, OPF Building , G-5/2, IslamabadPh: 9206500 , 9207200 , Fax: 9210215

E-mail : registrar@nepra .org.pk

No. NEPRA/TRF-177/CEPL- 2011 /3000-3002March 28, 2012

Subject: Determination of the Authority in the matter of Tariff Petition filed byChenab Energy (Pvt.) Ltd . for Determination of Feasibility Stage Tariff for4.8 MW Sahiwal Hydropower Project (Case No . NEPRA/TRF-177/CEPL-2011) - Intimation of Determination of Tariff pursuant to Section 31(4) of theRegulation of Generation, Transmission and Distribution of Electric Power Act(XL of 1997)

Dear Sir,

Please find enclosed herewith the subject Determination of the Authority along withAnnexure-I & II (28 pages ) in Case No. NEPRA/TRF-177/CEPL-2011.

2. The Determination is being intimated to the Federal Government for the purpose ofnotification of the approved tariff in the official gazette pursuant to Section 31(4) of theRegulation of Generation, Transmission and Distribution of Electric Power Act (XL of 1997)and Rule 16(11) of the National Electric Power Regulatory Authority (Tariff Standards andProcedure) Rules, 1998.

3. Please note that only Order of the Authority at para 26 of the Determination relating tothe reference tariff, adjustments, indexation and terms and conditions etc along withAnnexure-I & II needs to be notified in the official Gazette.

Enclosure : As above

( Syed Safeer Hussain)

SecretaryMinistry of Water & Power`A' Block, Pak SecretariatIslamabad

CC:1. Secretary, Cabinet Division , Cabinet Secretariat , Islamabad.2. Secretary , Ministry of Finance , Islamabad.

NATIONAL ELECTRIC POWER REGULATORY AUTHORITY(NEPRA)

Case No. NEPRA/TRF-177/CEPL - 2011March 28" , 2012

Petitioner

Chenab Energy (Pvt.) Ltd. (CEPL) for Determination of Generation Tariff inrespect of 4.8 MW Sahiwal Hydropower Project

Authority

Shaukat Ali KundiMember

Ghiasuddin AhmedMember (Tariff & CA)

Khalid SaeedChairman

v

w NEPRAaurHaRI IV

20,

,i`

Determination- Chenab Energy (Pvt) Ltd(Case No. NEPRA/TRF-177/CEPL-2011)

Determination of the Authority in the matter of Tariff Petition filed by

Chenab Energy (Private) Limited for Determination of feasibility stage tarifffor 4.8 MW Sahiwal Hydropower Project

CASE NO. NEPRA/TRF-177/CEPL-2011

Background

Chenab Energy (Private) Limited (hereinafter referred to as "CEPL", or the "Petitioner") filed

petition on July 5, 2011 for determination of feasibility stage generation tariff pursuant to Rule 3 of

the National Electric Power Regulatory Authority Tariff (Standards and Procedure) Rules, 1998

(hereinafter "NEPRA Tariff Rules") for 4.8 MW Sahiwal Hydropower Project (the "Project") located

at Lower Bari Doab Canal (LBDC) District Sahiwal, Punjab.

2. The Authority admitted the petition on July 15, 2011. Notice for admission and the Public

Hearing for participation of all the stakeholders was published in the daily newspapers on July 22,

2011. Written notices were also sent to the key stakeholders for their participation in the tariff

setting process either through their comments or becoming a party to the case as Intervener.

3. Public hearing of the Petition was held on August 11, 2011. In response to the Authority's

notice of admission and the hearing, various stakeholders filed their comments on the petition. An

intervention request filed by MEPCO, was also received. MEPCO's intervention request however,

was found to be incomplete and not in accordance with Rule 6 (2) & (3) of NEPRA Tariff Rules and,

therefore, was not accepted by the Authority. The Authority, however, decided to include MEPCO's

submissions as comments for discussion in the hearing of the petition. The following parties

submitted their comments in writing to the Authority.

i. Central Power Purchasing Agency (CPPA)

ii. Punjab Power Development Board (PPDB)

iii. Multan Electric Power Company Limited (MEPCO)

Submissions of the Petitioner

4. Summary of the technical and financial information provided by the petitioner is givenhereunder:

Type of the project Run-of-the-Canal Hydropower project (BOOT)

Project location RD 329+058 of Lower Bari Doab Canal (LBDC)

District Sahiwal, Punjab.

Installed capacity 4.8 MW

Construction Period 24 months after Financial Close

Concession Period 30 years from Commercial Operations Date

Proposed power purchaser Multan Electric Power Company (MEPCO)

Interconnection Voltage 11 KV

Length of interconnection 3.3 km

Gross Annual generation 29.00 GWh

g1ER Re


Net Annual generation 28.71 GWh

Plant factor 68.97%

Turbine Type Pit-Type Kaplan

Number of turbines 3

Turbine capacity 1 .6 MW each

Financing structure Debt 80% - Equity 20%

Equity Amount PKR 276.707 million US$ 3.294 millionDebt Amount PKR 1, 106.830 million US$ 13.177 millionDebt composition 100% Local Debt

Interest rate 3 months KIBOR + 3.50%

Debt repayment period 10 years plus 24 Months Grace Period

Repayment schedule basis Quarterly instalmentsReturn on equity 17%

Financial Consultant Hameed Majeed Associates (Pvt.) Limited

Project cost PKR (million) US$ (million)Total EPC Cost 992.845 11.820

Total Project Cost 1383.537 16.470

O&M Costs Per Annum PKR (million) US$ (million)Fixed O&M Costs 7.8775 0.0938

Variable O&M Costs 5.2255 0.0622

30 years levelized tariff Rs. 8.3820/kWh US cents 9.9785/kWhReference Exchange rate 1 US $ = PKR 84

5. The tariff petition of CEPL is based on project cost estimates from an updated feasibility

report dated May 21, 2011 duly endorsed by the Panel of Experts of PPDB. Cost breakup of variousproject activities is given hereunder.

Project CostUSD

(Million)

PKR

(Million)

Preliminary Works 0.372 31.218Civil Works 5.125 430.497Electro-Mechanical Equipment 5.320 446.880Design & Engineering 0.576 48.368General items 0.620 52.100

Interconnection Facilities 0.179 15.000

Custom Duties 0.285 23.940

Insurance During Construction 0.160 13.403

Project Company Costs 0.948 79.600Financing Costs 0.326 27.384Escalation - -

Interest During Construction 2.561 215.150

Total Project Cost 16.470 1383.537

Reference USD/PKR 84

2

Determination- Chenab Energy (Pvt) Ltd(Case No. NEPRA/TRF-177/CEPL-201 1)

Proceedings

Comments from Central Power Purchasing Agency (CPPA):

6. CPPA in its comments submitted to the Authority vide its letter dated August 8, 2011, raisedthe following issues:

- The design discharge of 5,816 cusecs on which the plant factor of the project has been

calculated, has never been recorded in the data for the past five years. CPPA claimed that the

data of past five years shows an average discharge of 3,171 cusecs; thus in view of CPPA,

obligating the power purchaser to make guaranteed payment based on an inflated discharge

is unrealistic and unjustified. CPPA submitted that a realistic generation capacity needs to be

computed based on the historic data in order to arrive at a justified tariff determination.

Furthermore, CPPA suggested that the tariff may be reviewed by NEPRA upon occurrence

of the proposed future scenario of rehabilitation and remodelling of LBDC canal.

- The project is being developed on a canal, where the water flow is controlled by the

Government of the Punjab, thus hydrological risk due to potential human intervention

should be borne by the Government of the Punjab.

- The Petitioner's request to allow adjustment of ROEDC and IDC, in case the project takes

longer than 24 months should not be accepted. In view of CPPA, project construction period

mentioned in the Feasibility report (i.e. 24 months) remains firm and final and PPAmentions a clear RCOD date.

- The CPPA has stated that US$ 0.576 million have been allocated as the cost of Design &

Engineering under EPC mode of project execution. In view of CPPA, this cost component is

an essential part of EPC price; hence separate allocation of this cost is unjustified.

- CPPA also opined that since this is a run-of-the-canal project, the cost of civil works should

be comparatively less but contrary to this fact, the petitioner has claimed total project cost

amounting to US$ 16.470 Million (US$ 3.431 million/MW), which is too high for a project ofthis size.

Petitioner's reply

- The annual energy output of 29 GWh has been based on actual flow of water from channel

during the period 1976-77 to 2003-04 (28 years) which is the base for project tariff

calculations. The government of Punjab is implementing the Rehabilitation Project of LBDC

main canal under AEDB Loan # 2299-PK. The work has been allotted to different firms in

packages through ICB. Rehabilitation work is scheduled to be completed by 2015. After

completion of this rehabilitation project the design discharge downstream RD

340+850/329+058 will be 5816 cusecs. The allocated share of LBDC has already been

available but due to system constraints, the capacity of the canal to carry that discharge wasnot available.


- The issue of hydrological risk has already been resolved with CPPA in a meeting dated

August 27, 2010.

The Net capacity of the plant has been calculated on the basis of prospective flows keeping in

view the updating of canal (Chapter 5 of the feasibility report).

- To CPPA observations that tariff should be reviewed by NEPRA upon rehabilitation of canalthe Petitioner submitted that it is not possible to redesign and reinstall the project again.

- CEPL has requested the project construction period of 24 months from financial

closing/notice to proceed. The construction period and required commercial operation date

will be fixed in the terms and conditions of PPA to be executed between CEPL and the

power purchaser. Prudence of this period will be evaluated by NEPRA at COD.

The cost of design and engineering has been shown separately as the cost of its

electromechanical equipment does include this cost. This cost represents review of design

and feasibility by the EPC contractor.

Comments from Multan Electric Power Company (MEPCO):

7. MEPCO vide letter No. FDM/BS/TARIFF/CEP114278 dated August 16th, 2011 raised thefollowing issues.

- The proposed tariff of Rs. 8.382/kWh (US cents 9.9785/kWh), is even higher than the gas

based tariff of small power producers supplying power to MEPCO.

- MEPCO also expressed its reservations about the cost of debt proposed by the Petitioner, i.e.

3-month KIBOR plus 350 basis points.

- MEPCO also stated that the issue of hydrological risk is still not fully resolved, as the

mechanism for hydrological risk to be borne by PPDB does not define penalties to beenforced in case of default.

- Finally, MEPCO expressed its concerns regarding the transfer of this project after completion

of the PPA term. MEPCO believes that under the norms of business the project should be

transferred to MEPCO because it is the power purchaser, however, the Petitioner intends to

transfer it to PPDB at the end of the concession period.

- Petitioner's reply

- The current tariff is based on updated feasibility report duly endorsed by the Panel of Experts

of PPDB as required by NEPRA. The low head hydropower projects require a big volume of

water and for this purpose requires larger turbines and infrastructure to generate electricity.

Determination- Chenab Energy (Pvt) Ltd(Case No . NEPRA/TRF-177/CEPL-2011)

These are long life projects and do not require any fossil fuel, and therefore, are cheaper in

the long run.

- The cost of hydropower project varies from site to site depending upon various factors such as

head height, type of the project (run of river or canal based), design, extent of civil work and

type of equipment required etc.

- CEPL is a BOOT project. As per GoP Guidelines for BOOT projects, the investor's equity will

be redeemed after completion of the debt servicing in 10 years.

- The maximum ceiling of 3.50% spread over KIBOR has been indicated for reference purpose.

Currently the loans are not available at a premium of 300 basis points. Premium of KIBOR

based loan has been assumed at 350 basis points being the current rate at which loans are

available. The repayment terms and interest rate benchmarks shall be adjusted on actual basis

at COD.

The Punjab Power Generation Policy, 2006 (Revised 2009) stipulates that hydropower

projects shall be transferred to the Government of the Punjab for a notional value of Rs. 1 at

the end of a concession period allowed by PPDB from the Commercial Operation Date

(COD).

Comments from Punjab Power Development Board (PPDB):

8. PPDB vide letter no. MD(PPDB)/1445/2011 dated August 4th, 2011, submitted the following:

- The power purchaser has agreed to bear `Hydrological Risk' for run-of-the-canal projects

through minutes of meeting duly circulated by CPPA vide letter No. COO/CPPA/CE/MT-

III/PPDB/5924-34 dated 5th October 2010.

- Furthermore, PPDB acknowledged that capital and operational cost estimates of the Project

have been duly vetted by its Panel of Experts (POE).

ISSUES

9. In the light of submissions of the petitioner, comments and proceedings of the case the

petition has been analysed based on the following issues:

â Hydrological Data and Plant Capacity

â Annual Energy Production

â Hydrological Risk

â Project Cost

EPC Cost

Non-EPC Cost

â Construction Period

'11^

Determination- Chenab Energy (Pvt) Ltd

(Case No . NEPRA/PRF-]77/CEPL-2011)

â Operations & Maintenance Cost

â Insurance during operation

â Carbon credits

â Water Use Charges

â Return on Equity during Construction (ROEDC) and Return on Equity (ROE)

â Debt Servicing Component

10. Hydrological Data and Plant Capacity

10.1 Review of the feasibility report of CEPL reveals that the consultants have carried out theircalculations for computation of installed capacity of 4.8 MW at a designed discharge of 5816 cusecs.

However , for calculation of mean annual gross energy of 29.00 GWh, the consultants have relied on

actual available hydrological data of the canal for the last 28 years (starting from 1976 -77 to 2003-04)

gathered by the Power and Irrigation Department , on the basis of mean annual discharge of 4271

cusecs.

10.2 The CPPA in its comments to the Authority has submitted that the Petitioner has used

design discharge of LBDC at 5,816 cusecs to estimate the plant factor of the project even though

discharge of 5,816 cusecs has never been recorded at LBDC in the last 28 years.

10.3 An in-depth perusal of the feasibility study has revealed that the mean annual energy

computation takes into account a mean discharge of 4,271 cusecs, which is based on the actual

historical hydrology/data, gathered on daily basis at RD329+058 of the canal, by the Punjab

Irrigation and Power Department over a period of 28 years (1976-2004). The figure of 5,816 cusecs

only represents the design discharge that will be available at the project site after rehabilitation of

LBDC canal.

10.4 It was also confirmed by the Petitioner during the public hearing that the design discharge of

5,816 cusecs has been taken into account only to the extent of project design so that in case the canal

is rehabilitated all of the available potential of energy can be harnessed.

10.5 The Authority observed that the Petitioner has used a higher than available design discharge

of 5816 cusecs for finalizing the project design and size of its power plant in view of expected

increase in water flows upon rehabilitation of the canal, which may impose additional financial

implications/risks for the Power Purchaser, if the increased discharge of 5816 cusecs is not available

to the project.

10.6 The Authority has considered that the installed capacity of 4.8 MW based on the potential

available annual discharge of 5816 cusecs has been claimed by the Petitioner as per its feasibility

report duly approved by the Panel of Experts of PPDB. The Petitioner was asked to substantiate

through provision of documentary evidence, its claim for available water discharge of 5816 cusecs

and the proposed installed plant capacity of 4.8 MW. The Authority also desired that actual water

flows for the period 2004 to 2011 at location of the proposed plant be provided by the Petitioner.

Determination- Chenab Energy (Pvt) Ltd(Case No. NEPRA/TRF-177/CEPL-201 1)

10.7 The Petitioner through its communications dated January 2, 2012 and January 17, 2012

provided the requisite information, whereby it was observed that the maximum discharge of 5538

cusecs was observed in November 2006 whereas the average annual discharge remained at maximum

of 4230 cusecs.

10.8 In support, the Authority also received a letter of Project Management Unit, LBDC

Improvement Project dated February 14, 2012, through the Energy Department, Government of the

Punjab whereby it was communicated that the design discharge of canal at project location is 5816

cusecs but due to operational constraints, the canal has been operated at lower than its maximum

discharge capacity. It has been further stated that after implementation of LBDC project the available

discharge at the project location would be 5816 subject to availability/allocation of water at Head

Balloki Barrage.

10.9 After reviewing all the information/data provided by the Petitioner, the Authority has

decided that in order to promote small hydropower projects and also to avoid further delay, the

proposed project installed capacity of 4.8 MW based on feasibility already approved by the Panel of

Experts of PPDB is provisionally accepted at this stage. The Petitioner is, however, directed to

reaffirm its project size based on actual availability of water flows pursuant to canal rehabilitation

and detailed engineering to be carried out for EPC bids. The Authority will reconsider its current

decision on the hydrological data and plant capacity based on latest available hydrological data at the

time of EPC stage tariff petition to be filed by the Petitioner in accordance with the approved

Mechanism for Determination of Tariff for Hydropower Project (hereinafter referred to as "the

Hydropower Mechanism").

11. Annual Energy Generation

11.1 The Petitioner has proposed annual energy production of 29 .00 GWh at annual plant factorof 68 . 97%, which has also been verified from its feasibility report. The Petitioner has requested forapproval of net annual energy production of 28 .71 GWh, after accounting for auxiliary consumptionof 1%.

11.2 The Authority in the case of other hydropower projects (Panjnad, Rasul and Riali-II) has

allowed auxiliary consumption at 0.5% of the gross annual generation. On similar lines the net

annual energy production in the instant case works out to be 28.855 GWh and therefore, is approvedfor CEPL.

12. Hydrological Risk:

12.1 The Petitioner has proposed that hydrological risk shall be borne by the power purchaser in

accordance with the Punjab Power Generation Policy 2006 (Revised in 2009). The power purchaser

(MEPCO) and CPPA in their comments to the Authority have shown their reservations over the

mechanism for determination of hydrological risk. In this regard the petitioner has submitted

decision/minutes of the meeting held on October 5, 2010, attended by representatives of CPPA,

LESCO, GEPCO, FESCO, MEPCO, IESCO, PPDB and PIPD, whereby it has been decided between

the parties that the Power Purchaser will bear the risk of hydrology for projects constructed on

Determination - Chenab Energy (Pvt) Ltd(Case No. NEPRA/TRF-177/CEPL-201 1)

rivers/canals; however, if there is any reduction in water flows due to reasons caused by human

intervention such as construction of any branch canal/main canal upstream of the project then the

hydrological risk in this case will be borne by the Punjab Irrigation and Power Department.

12.2 The Authority considers that the issue of hydrological risk for small hydropower power

plants to be constructed on run-of-canal has been resolved in principle between the power purchaser

and the PPDB as mentioned above. The Authority, however, directs PPDB and the respective power

purchasers for projects located on canals in the province of Punjab to finalize the intricate details of

payment of hydrological risk obligations in the PPA and Water Use Agreements to be signed

between the parties in an expeditious manner for smooth development and completion of

hydropower projects.

13. Project Costs

13.1 The Petitioner has claimed US$ 16.470 million (Rs. 1383.537 million at PKR/US$ exchange

rate of Rs. 84.0) on account of its total project cost. The proposed cost of the project for each project

activity segregated in to two main components i.e. EPC Cost and Non-EPC cost has been discussed as

hereunder.

14 EPC Cost:

14.1 The petitioner has requested for approval of US$ 11.820 million (PKR 992.845 million) on

account of EPC cost of the project broken down in to major project activities as given hereunder.

EPC Cost PKR (Million) US$ (Million)

General Items 52.100 0.620Civil Works 430.497 5.125Electro-Mechanical Equipment 446.880 5.320Design & Engineering 48.368 0.576Interconnection Facilities 15.000 0.179

Base EPC Cost 992.845 11.820

General items

14.2 As per information provided in the feasibility report, the cost of general items (Rs. 52.100

million) include, dewatering of power house (Rs. 6.453 million), Construction of staff colony (Rs.

28.406 million), Power house offices (Rs. 4.404 million) and water supply, sewerage & septic system

(Rs. 12.837 million).

14.3 Scrutiny of details for each cost component of general items as provided by the Petitioner

revealed that the Petitioner has sought approval of Rs. 28.406 million on account of construction of

staff colony spread over covered area of 13294 square feet comprising residential accommodation of

Resident Engineer, Asstt. Resident Engineer and staff quarter, servant quarters, 4 shops and one Rest

House. The Authority considers there is no requirement to construct a full fledge staff colony as the


project of CEPL is located in the developed area close to the main city of Sahiwal. The Petitioner is

therefore directed to review size of proposed staff colony considering its bare minimum

requirements. The Authority also observed that the proposed per square foot rate of Rs. 2136/- is

higher than other comparable hydropower projects. In view of the foregoing the Authority has

decided to allow Rs. 17.282 million on account of staff colony cost.

14.4 The cost of other general items i.e. dewatering cost, offices and water supply & sewerage

system has been proposed as per feasibility estimates and found to be reasonable therefore approved

as per request of the Petitioner. Accordingly, total amount of Rs. 40.976 million (US$ 0.488 million)

is approved for cost of General Items.

Civil Works

14.5 The Petitioner has claimed Rs. 430.497 million (US$ 5.125 million) for civil works cost as per

estimates provided in its feasibility report. The scope of civil works includes the cost of Power

Channel (Fall structure at RD 329+058 and RD 340+850, head race and tail race channel, roads and

upstream and downstream transition), Bridges and Power House. The cost for civil works has been

estimated in the feasibility on the basis of preliminary studies for project design and BOQs which

will be firmed up at the EPC stage pursuant to detailed engineering to be carried by the Petitioner.

The estimated cost of civil works is considered to be reasonable in view of scope of civil works being

run of the canal hydropower project and therefore approved by the Authority as per request of thePetitioner.

14.6 The petitioner has requested for adjustment of civil works cost in accordance with the

Hydropower Mechanism. The Authority noted that the Hydropower Mechanism emphasizes on

completeness of project feasibility based on detailed studies and firm BOQs. It has been observed that

project feasibility of CEPL is not based on detailed engineering and design of the project and

consequently the BOQs mentioned in the feasibility report are not firm at this stage.

14.7 In view of the aforementioned the Authority has decided to allow adjustment of civil workscost based on specific cost adjustment formulae at the time of EPC stage tariff as already allowed bythe Authority in case of other such hydropower projects.

Electro-mechanical Equipment

14.8 The Petitioner has proposed US$ 5.320 million (Rs. 446.880 million) on account of cost of

electro-mechanical equipment comprising US$ 3.173 million for Mechanical works and US$ 2.147

million for the electrical equipment. The proposed cost of electro-mechanical equipment on per MW

basis works out to be US$ 1.108 million, which is found to be high when compared with Authority's

approved cost of electro-mechanical equipment for other comparable hydropower projects.

According to the initial feasibility report of CEPL (dated December 2005), the total cost of

electromechanical equipment was estimated at US$ 2.759 million (US$ 0.575 million/MW), which

has now been revised to US$ 5.320 million as per its updated feasibility report dated May 2011.


14.9 The Authority recognizes the fact that cost of hydro-mechanical equipment in the case of

low head hydropower projects is comparatively higher than the high head run-of-the-river

hydropower projects. Considering small size of the CEPL project and information available with the

Authority, the Authority has assessed Rs. 282.240 million (US$ 3.360 million) for the cost of electro-

mechanical equipment.

Project design and Engineering

14.10 The Petitioner has proposed US$ 0.576 million for the cost of project design and engineering

as a separate component of its total EPC cost. The Petitioner has submitted that this cost represents

review of project design and feasibility to be carried out by the EPC contractor. The CPPA in its

comments to the Authority submitted that detailed engineering is carried out by the EPC contractor

which is included in the EPC contract price and therefore, CEPL should not be allowed the cost of

design and engineering separately as proposed by the Petitioner. The Petitioner in its reply to the

aforementioned reservations of CPPA submitted that the cost of design and engineering has not been

included in the cost of electromechanical equipment and therefore, has been shown separately underits total EPC cost.

14.11 The Authority observed that the cost of detailed engineering in the case of hydropower

projects for finalization of project design and BOQs is required, the cost of which is either included

in the offered EPC bid price or claimed separately by the Petitioner if this assignment is to be carried

by the project sponsors themselves before calling for EPC bids. In either case it has to be a part of thetotal project cost.

14.12 In the instant case, the cost of project design and detailed engineering has been claimed

separately by the Petitioner which means that the same cost will not be claimed by the EPC

contractor in its offered bid price. However, in the opinion of the Authority the amount of US$

0.576 million claimed by the Petitioner on this account is high (5% of EPC cost) considering the fact

that scope of detailed engineering to be carried for the CEPL's project does not involve extensive

studies for the geological uncertainties as these are required in the case of projects with undergroundtunnels located in the mountainous region.

14.13 The Authority in the case of Rasul and Panjnad hydropower projects located in the plains of

Punjab has allowed the cost of design and engineering based at 3% of their approved EPC cost. Based

on the same principle, the cost of design and engineering works out to be Rs. 23.311 million (US$0.278 million) and therefore, the same is approved for CEPL.

Interconnection Facilities

14.14 The Authority has noted that the Petitioner has included Rs. 15.000 million (US$ 0.179

million) on account of cost of interconnection as part of its total EPC cost. According to the

Petitioner the project is proposed to be connected to the nearest grid station of 1lkV voltage level

being operated by MEPCO. The power will be disbursed by constructing 3.3 kM new independent

11 KV feeder with ACSR "OSPREY" conductor from power house to 132 kV Grid station Sahiwal

10


(new). MEPCO (the power purchaser in this case) in its power acquisition request has shown its

willingness to procure power from CEPL, provided the cost of interconnection is borne by the

project sponsors.

14.15 The Authority on the issue of connectivity cost in other hydropower projects has decided

that in case the cost of interconnectivity is borne by the project sponsors the same shall be allowed

on the basis of documentary evidence at COD. On similar basis, in case CEPL is required to bear the

cost of connectivity, it shall be considered by the Authority for adjustment in tariff based on

verifiable documentary evidence at COD.

15. Recapitulating, the total EPC cost approved for CEPL works out to be Rs. 777.024 million

(US$ 9.250 million at US$/PKR reference exchange rate of Rs. 84.0). The components of EPC cost to

be paid in foreign currency shall be adjusted at COD on the basis of applicable US$/PKR exchange

rate at particular date of transaction, whereas no adjustment on account of exchange rate variation

will be allowed on costs paid in local currency.

16. Non-EPC Cost

16.1 The Petitioner has proposed Rs. 390.695 million (US$ 4.651 million) on account of total Non-

EPC cost comprising project development cost, land acquisition and resettlement, custom duty,

insurance during construction, construction management, cost of independent and owner's engineer,

pre-COD O&M cost, financial charges and Interest during construction as per the following breakup

of cost.

Non-EPC Cost PKR

Million

US$

Million

Project Development Cost 10.577 0.126

Land acquisition and resettlement 20.641 0.246

Custom Duty 23.940 0.285

Insurance during Construction 13.403 0.160

Construction Management 49.600 0.590

Owner's Engineer 12.000 0.143

Independent Engineer 6.000 0.071Pre-COD O&M Cost 12.000 0.143Financial Charges 27.384 0.326Interest during construction 215.150 2.561

Total 390.695 4.651

Project Development Cost

16.2 The Petitioner has claimed Rs. 10.577 million (US$ 0.126 million) on account of its project

development costs which comprises of bank guarantees payable to PPDB, legal expenses, project

feasibility, EPC tender preparation & evaluation and fees payable to various government agencies forregistration and permits.

I lit


16.3 The Project Development cost of Rs. 10.577 million (US $ 0.126 million) as claimed by the

Petitioner on the basis of revised feasibility study is found to be reasonable in comparison to the

same cost allowed by the Authority in similar other hydropower projects and, therefore, approved by

the Authority.

Land Acquisition & Land Development Cost

16.4 The Petitioner has claimed Rs. 20.641 million (US $ 0.246 million) on account of land

acquisition and development cost. According to the information provided by the Petitioner it

requires 32 acres of land for the project for which it has estimated an amount of Rs. 18.720 million

(US $ 0.223 million). The Petitioner has included Rs. 1.921 million for construction of boundary wall

and colony gate under the head of land development and environment cost. The Petitioner has

submitted that there are no issues of resettlement, as the land is being used for agricultural purposes

which will be purchased from the land owners.

16.5 The total cost of land acquisition and development Rs. 20.641 million (US$ 0.246 million) as

requested by the Petitioner is reasonable considering the project location and therefore approved. As

per the Hydropower Mechanism the cost of land acquisition is adjustable on actual basis at COD.

Accordingly Rs. 18.720 million allowed to CEPL on account of land acquisition will be adjusted on

the basis of actual through provision of authentic documentary evidence at COD in accordance with

provisions of the Hydropower Mechanism.

Custom Duties

16.6 The Petitioner has claimed Rs. 23.940 million (US$ 0.285 million) on account of custom

duties on the imported plant and equipment. However, based on approved cost of electro-

mechanical equipment, the amount of custom duties at 5% works out to be Rs. 14.112 million (US$

0.168 million) and therefore, approved by the Authority. The cost of custom duty and other

applicable taxes will be adjusted on actual basis, subject to production of documentary evidence at

the time of COD.

Insurance During Construction

16.7 The Petitioner has claimed insurance during construction estimated at Rs. 13.403 million (

US$ 0.160 million) based at 1.35% of its claimed EPC cost. The Authority has allowed a maximum

ceiling of 1.35% of EPC cost in comparable cases. Based on approved benchmark of 1.35% of the EPC

cost, the insurance during construction for CEPL works out to be Rs. 10.490 million (US$ 0.125

million) and therefore approved by the Authority. Insurance during construction will be adjusted at

COD based on actual documentary evidence subject to the maximum of 1.35% of the adjustedapproved EPC cost.

Construction Management

16.8 The Petitioner has proposed Rs. 49.600 million (US$ 0.590 million) on account of

construction management, which covers salaries and related costs of project company employees,

office cost, supplies and furniture, and travelling cost. The Petitioner has worked out the amount of

construction management based on 36 months period of project construction. The consultants in the

12'^J/

Z4


project feasibility have recommended 24 months construction period. The cost of the construction

management based on 24 months construction period works out to be Rs. 33.067 million (US$ 0.394million) and therefore being allowed to CEPL.

Owner's Engineer

16.9 The Petitioner has claimed Rs. 12.000 million (US$ 0.143 million) on account of Owner's

Engineer cost. The services of owner's engineer are required during the project construction period

for monitoring and supervising project activities.

16.10 In the opinion of the Authority the Petitioner's claim for cost of its Owner's Engineer is high

in comparison to similar cost allowed by the Authority in other comparable hydropower projects.

The Authority has therefore assessed Rs. 7.200 million (US$ 0.086 million) which is commensurate

with the scope of services to be provided by the owner's Engineer during the project constructionperiod and therefore, approved for CEPL.

Independent Engineer

16.11 The Petitioner has claimed Rs. 6.000 million (US$ 0.071 million) on account of cost of an

independent engineer. As per feasibility study this cost component comprises expenses of Lender's

engineer as per requirement of Lenders and therefore covers bank expenses to review the technicalaspects of the project.

16.12 The cost of independent engineer under the PPA pertains to the independent engineer

appointed on behalf of the Power Purchaser for verification and certification of performance tests to

be carried out by an IPP at COD. The Petitioner has claimed cost of lender's engineer under this

head which is not appropriate.

16.13 The Authority considers that cost of lenders engineer is covered under the financial charges

allowed to the IPPs. Therefore, the cost of lender's engineer as claimed by the Petitioner separately

under the head of Independent engineer is not justified and therefore not allowed by the Authority

under this head as separately claimed by the Petitioner.

Pre-COD O&M Cost

16.14 The Petitioner has claimed Rs. 12.000 million (US$ 0.143 million) on account of pre-COD

O&M cost. As per the standardized PPA for hydropower Projects the project sponsors are

compensated by the power purchaser on account of pre-COD sale of energy on the basis of variable

O&M cost component and water use charges. The claim of the Petitioner for Pre-COD O&M cost isnot justified and, therefore, not allowed by the Authority.

Financial Charges

16.15 The financial charges include the lenders' up-front fee and commitment fee; charges related

to the letters of credit to be established in favour of various contracting parties; bank commission,

agency fee and security trustee fee etc. The Petitioner has provided the following breakup offinancial charges:


Financial Charges US$ million

Lender Upfront Fees (@ 1.25% of loan facility) 0.136Lenders Consultancy Fee, Agency Fee 0.066

Commitment Fees (0.50% of the Loan amount) 0.054

L/C Charges, Commissions etc 0.070

Total 0.326

16.16 The Petitioner has worked out the amount of financial charges on the basis of 3% of its total

claimed amount of borrowing. The Authority in other comparable cases has allowed financial

charges at maximum of 3% of the total debt excluding the impact of IDC and financial charges. On

this basis, the amount of financial charges for CEPL works out to be Rs. 20.955 million (US$ 0.249

million) and therefore, approved by the Authority, subject to adjustment on actual at maximum of

3% of the approved amount of debt excluding the impact of IDC and actual financial charges at

COD.

Interest During Construction (IDC)

16.17 The Petitioner has proposed Rs. 215.150 million (US$ 2.561 million) on account of Interest

During Construction (IDC) for the project construction period of 24 months, based on the proposed

terms of financing i.e. KIBOR at 13.24% and spread of 3.5%.

16.18 The Power Purchaser (MEPCO) in its comments to the Authority has shown its reservations

over the higher spread of 350 basis points over KIBOR as proposed by the Petitioner. The Petitioner

in its response has submitted that Premium of KIBOR based loan has been assumed at 350 basis

points being the current rate at which loans are available. The repayment terms and interest rate

benchmarks shall be adjusted on actual basis at COD.

16.19 The Authority considers that risk of investment from lender's perspective is lower for

projects located in the plains of Punjab than those hydropower projects located in the highly seismic

zones and geo-politically sensitive areas in the Northern parts of the country. The Authority in its

latest tariff determinations for Rasul and Punjnad hydropower projects both located in the province

of Punjab, has approved a spread of 300 basis points over KIBOR. In line with its earlier decision for

the aforementioned, the Authority has approved spread of 300 basis points over KIBOR for CEPL.

16.20 Accordingly, on the basis of current 3-month KIBOR at 11.88%, spread of 300 basis points,

project construction period of 24 months and proposed phasing of financing, the amount of IDC for

CEPL works out to be Rs. 140.624 million (US$ 1.67409 million) and allowed at this stage. The

amount of IDC is an estimated figure and will be adjusted at COD based on actual borrowing

composition, loan draw downs and prevailing 3-months KIBOR during the project construction

period of 24 months.

17. Construction Period

17.1 The Petitioner has requested for allowing construction period of 24 months. The feasibility

study shows construction period of 24 months after financial close. The Petitioner has further

14

V A


submitted that this construction period is not firm and in case the completion of the project takes

more than 24 months, its IDC and ROEDC shall be adjusted based on the actual construction period

of the project.

17.2 The CPPA in its comments has shown its reservations while submitting that project

construction period is not adjustable once fixed at the time of signing of PPA indicating the firm date

of RCOD.

17.3 The Authority in other similar cases has decided that the construction period and requiredCOD should be fixed in the terms and conditions of power purchase agreement to be executedbetween the Petitioner and power purchaser , and prudency of this period/date will be evaluated bythe Authority at COD stage.

17.4 In view of the aforementioned , the request of the Petitioner to adjust the constructionperiod on the basis of actual is not justified and therefore , not accepted by the Authority.

18. Recapitulating , the total approved project cost for CEPL works out to be Rs. 1034 .690 million(US$ 12.318 million as per the following breakup.

Project Costs Approved

(Rs. Million) (US$ Million)

General Items 40.976 0.488

Civil Works 430.497 5.125

Electro-Mechanical Equipment 282.240 3.360Design & Engineering 23.311 0.278BASE EPC COST 777.024 9.250

Project Development Cost 10.577 0.126

Land acquisition & Development Cost 20.641 0.246

Custom Duties 14.112 0.168Insurance During Construction 10.490 0.125

Construction Management 33.067 0.394

Owner's Engineer 7.200 0.086

Financial Charges 20.955 0.249Interest During Construction (IDC) 140.624 1.674

Total 1034.690 12.318

19. Operations & Maintenance Cost

19.1 The Petitioner has requested the Authority to allow the following per annum O&M costs forits operational period:

15 ,/ iM


Description of Expense US$

Variable O&M Cost 62,208

Fixed O&M Cost 93,780

Total 155,988

19.2 The Petitioner has stated that Variable O&M shall include components such as cost of

services of the O&M operator; contractors' mobilization; replacement of spare parts on completion of

their service life; replacement on account of premature failure of the parts; cost of maintenance for

unscheduled/unforeseen outages; and consumption of lubricants, chemicals etc. According to the

Petitioner, 50% of this component will be in foreign currency, and the rest will be in the local

currency.

19.3 The Petitioner has stated that Fixed O&M shall include components such as management

fee; cost of expatriate services for operation & maintenance of the plant; remuneration to the staff;

and other administrative costs including rents, utilities, NEPRA fees, audit fees, legal retainer-ship,

consultancy fees, environmental monitoring and reporting fees. According to the Petitioner, the

fixed O&M cost includes 20% foreign component and 80% local component.

19.4 The Authority has considered the Petitioner's request for its annual O&M cost and found to

be reasonable and within the maximum limit of O&M cost allowed to other comparable hydropower

projects. The Authority, therefore, approves per annum O&M cost requested by the Petitioner as per

the following breakup.

O&M Cost Per annum

US$

Per annum

Rs Mln

Variable- Local 31,104 2.613

Variable- Foreign 31,104 2.613

Fixed -Local (80%) 75,024 6.302

Fixed- Foreign (20%) 18,756 1.576

Total 155,988 13.103

20. Insurance during Operation

20.1 The Petitioner has claimed US$ 0.149 million per annum for Insurance expense during the

plant operation on the basis of 1.35% of claimed EPC cost. The Authority in other comparable cases

has allowed per annum insurance expense at maximum of 1.35% of the approved EPC cost. The

Petitioner request for its Insurance expense to be based at 1.35% is within the maximum limit

allowed by the Authority in other comparable hydropower project, and therefore accepted by the

Authority. On this basis the per annum cost of insurance for the Petitioner works out to Rs. 10.490

million (US$ 0.125 million) and therefore approved by the Authority. The per annum insurance

expense shall be adjusted on the basis of actual, subject to the maximum ceiling of 1.35% of the

approved EPC cost on production of verifiable documentary evidence at the time of COD.

16

A


21. Carbon credits

21.1 The petitioner has not taken into account future proceeds with respect to certified emission

reductions in its tariff calculations as the actual timing, amount and other details of the outcome are

quite uncertain at this stage.

21.2 The Authority in other cases has approved sharing of carbon credit receipts on actual

realization between the project sponsors and the power purchaser in accordance the applicableGovernment of Pakistan Policy as amended from time to time, which shall also be applicable in thecase of CEPL.

22 Water Use Charges

22.1 The Petitioner has claimed Rs. 0.15/kWh on account of water use charges and requested that

water use charges may be indexed with WPI on annual basis as approved by the Authority in other

such cases. As per the Petitioner water use charges are payable to the Government of Punjab under

the water use agreement to be signed between the parties.

22.2 The request of the petitioner is in line with decision of the Authority for other hydropower

projects hence approved.

23 Return on Equity During Construction (ROEDC) and Return on Equity(ROE)

23.1 The Petitioner has requested for allowing 17% return (IRR based) on invested equity with a

Debt/Equity ratio of 80:20. The project is to be constructed on BOOT basis as per the Punjab Power

Generation Policy 2006 and therefore equity is required to be redeemed after completion of the debt

servicing in 10 years operational period. The Petitioner has also requested for return on equity

during construction period (ROEDC) based on its project construction period of 24 months.

23.2 In accordance with previous practice the components of ROE and ROEDC have been worked

out as indicated in the reference tariff table attached herewith as Annex-I.

24 Debt Servicing component

24.1 The Petitioner has proposed that 80% of its project cost will be financed from local debt

based on KIBOR at 13.24% and spread of 350 basis points with debt tenure of 10 years after COD.

The debt servicing will be made on quarterly basis.

24.2 The Authority has already decided to allow spread of 300 basis points over KIBOR asdiscussed in the preceding paragraphs . Accordingly debt servicing schedule based on KIBOR at11.88% and spread of 300 basis points is attached herewith as Annex-II.

25. Based on the approved cost as discussed in the preceding pages of Authority's determination,

the component wise tariff table is attached herewith as Annex-I.

17

A


Order.

26. Pursuant to Rule 6 of the NEPRA Licensing (Generation) Rules, 2000, Chenab Energy

Pakistan Limited (CEPL) is allowed to charge the following tariff for delivery of electricity to Multan

Electric Power Company:

Tariff Components Year

1-10

Year

11-30

Indexation

Variable Charge (Rs/kWh)

Variable O&M Local 0.0905 0.0905 WPIVariable O&M Foreign 0.0905 0.0905 PKR/US$, US CPIWater Use Charge 0.1500 0 .1500 WPIFixed Charge (Rs/kW/M)Fixed O&M Local 109.9598 109 .9598 WPIFixed O&M Foreign 27.4899 27.4899 PKR/US$, US CPIInsurance 183.0300 183.0300 PKR/US$

Debt Service 2798.3327 - KIBOR

Return on Equity 613.8228 641.5906 PKR/US$

Return on equity during

construction (ROEDC) 63.1788 63.1788 PKR/US$

i. The reference tariff has been calculated on the basis of net contracted capacity of 4.776 MW

and net annual energy production of 28.855 GWh.

ii. Hydrological risk shall be borne by the Power Purchaser in accordance with the GOP Policy

for Power Generation Projects 2002 as amended from time to time.

iii. In the above tariff, no adjustment for Carbon Emission Receipts (CERs) has been accounted

for. However, upon actual realization of CERs, the same shall be distributed between the

Power Purchaser and CEPL in accordance with the GOP Policy for Power Generation

Projects 2002 as amended from time of time.

iv. The above tariff is applicable for a period of thirty (30) years on BOOT basis commencing

from Commercial Operation Date (COD).

v. Debt service shall be paid in the first 10 years of commercial operation of plant after COD.

vi. Redemption of equity has been allowed after 10 years of commercial operation of the plant.

vii. The Petitioner is entitled to adjustment of cost reopeners and cost escalation in the civil

works. Such adjustment will be allowed subject to provision of the required information/data

in accordance with the Mechanism for Determination of Tariff for Hydropower Projects

approved by NEPRA.

viii. The reference PKR/Dollar rate has been assumed at 1 USD = 84 PKR.

ix. The component wise tariff is indicated at Annex-I

X. Debt Servicing Schedule is attached as Annex-II

18

J

't

A

Determination- Chenab Energy (Pvt) Ltd(Case No. NEPRA/TRF-177/CEPL-20I 1)

I. One Time Adjustment

a. The Principal repayment and the cost of debt; will be adjusted at COD as per the actual

borrowing composition and KIBOR at the relevant date.

b. Interest During Construction (IDC) will be adjusted at COD on the basis of actual debt

composition, debt drawdown (not exceeding the amount allowed by the Authority) and

applicable 3-months KIBOR during the project construction period allowed by the Authority.

c. The specific items of project cost to be paid in foreign currency (i.e. US$) will be adjusted at

COD on account of actual variation in exchange rate over the reference PKR/US$ exchange

rate of Rs. 84.00 on production of verifiable documentary evidence by the Petitioner.

d. Custom duties and taxes have been assumed as US$ 0.168 million. The amount of actual duties

and taxes imposed on the Petitioner shall be adjusted in project cost on production of

documentary evidence at the time of COD.

e. Cost of land procured for the project shall be adjusted in accordance the Hydropower

Mechanism based on authentic documentary evidence at COD.

f. Insurance during construction will be adjusted at COD based on actual subject to the

maximum of 1.35% of the adjusted and approved EPC cost upon production of verifiable

documentary evidence.

g. Financial charges will be adjusted at COD based on actual subject to the maximum of 3% of

the approved amount of debt excluding the impact of interest during construction and

financial charges.

h. Return on Equity (ROE) and Return on Equity During Construction (ROEDC) will be

adjusted at COD for actual equity injection during the project construction period allowed by

the Authority.

II. Pass-Through Items

No provision for income tax has been accounted for in the tariff. If the power producer is obligated to

pay any tax, the exact amount paid by the power producer (the Company) shall be reimbursed by the

Power Purchaser to the Company on production of original receipts. This payment should be

considered as pass-through payment (Rs/kW/M) spread over a twelve (12) months period in addition

to fixed charges in the Reference Tariff.

Withholding tax on dividends is also a pass through item just like other taxes as indicated in the

government Guidelines. Withholding tax shall be paid @ 7.5% of the return on equity. The Power

Purchaser shall make payment on account of withholding tax at the time of actual payment of

dividend subject to maximum of 7.5% of 17% equity according to the following formula:

Withholding Tax Payable = [{17% * (E (Ref) - E (Red))) + ROEDC (Ref)] x 7.5%

19


(Case No. NEPRA/TRF-177/CEPL-2011)

Where:

E (Ret) = Adjusted Reference Equity at COD E (Red) = Equity Redeemed

ROEDC (Ref) = Adjusted Reference Return on Equity During Construction

In case the Company does not declare a dividend in any particular year or only declares a partial

dividend, then the difference in the withholding tax amount (between what has been paid in that

year and the total entitlement as per the Net Return on Equity) would be carried forward and

accumulated so that the Company is able to recover the same as a pass through item from the Power

Purchaser in future on the basis of the total dividend payout.

III. Hydrological Risk

Hydrological Risk shall be borne by the Power Purchaser in accordance with the GoP Policy for

Power Generation 2002, GoP Policy for Development of Renewable Energy for Power Generation,

2006 and Punjab Power Generation Policy 2006.

IV. Indexation

The following indexation shall be applicable to the reference tariff:

i) Indexation applicable to O&M

The Variable O&M cost is based on 50% local and 50% foreign expense. The Fixed

O&M cost is based on 80% local and 20% foreign expense. The local part of O&M will

be adjusted on account of Inflation (WPI), whereas the foreign part of O&M will be

adjusted on account of Rupee/Dollar exchange rate variation and US CPI. Quarterly

Adjustment for local inflation, foreign inflation and exchange rate variation will be

made on 1st July, 1st October, 1st January & 1st April respectively on the basis of the

latest available information with respect to WPI (or alternative index as determined

by the Authority), US CPI (notified by US bureau of labor statistics) and revised TT &

OD Selling rate of US Dollar (notified by the National Bank of Pakistan). The mode of

indexation will be as under:

a. Fixed O&M

F O&M (LREV) = Rs 109.9598/kW/M * WPI (REV) / 209.470

F O&M (FREV) = Rs 27.4899/kW/M * USCPI (REV)/ 226.665 * ER(REV)/84

Where:


(Case No. NEPRA/TRF-177/CEPL-2011)

FO&M (LREV) the revised applicable Fixed O&M Local Component of the

Fixed Charges indexed with WPI.

FO&M (FREV) The revised applicable Fixed O&M foreign component of the

Fixed Charges indexed with US CPI and currency fluctuation.

WPI (REV) the Revised Wholesale Price Index (Manufacturers) / or

alternative index as determined by the Authority.

WPI (REF) the Wholesale Price Index (Manufactures) of July 2011 / or

alternative index as determined by the Authority and notified

by the Federal Bureau of Statistics.

USCPI (REV) The Revised US Consumer Price Index (All Urban Consumers)

notified by the Bureau of Labor Statistics.

WPI (REF) Reference US CPI (All Urban Consumers) notified by the

Bureau of Labor Statistics for the month of January 2012.

b. Variable O&M

VO&M (LREV) = Rs 0.0905/kWh * WPI (REV) / 209.470

VO&M(FREV) = Rs 0.0905/kWh * USCPI (REV)/ 226.665 * ER(REV)/84

Where:

VO&M (LREV) the revised applicable Variable O&M Local Component of the

Variable Charges indexed with WPI.

VO&M (FREV) The revised applicable Variable O&M foreign component of

the Variable Charges indexed with US CPI and currency

fluctuation.

WPI (REV) the Revised Wholesale Price Index (Manufacturers) / or

alternative index as determined by the Authority.

WPI (REF) the Wholesale Price Index (Manufactures) of July 2011 / or

alternative index as determined by the Authority and notified

by the Federal Bureau of Statistics.

2 1

Determination - Chenab Energy (Pvt) Ltd

(Case No. NEPRA/'TRF-177/CEPL-2011)

USCPI (REV) The Revised US Consumer Price Index (All Urban Consumers)

notified by the Bureau of Labor Statistics.

USCPI (REF) Reference US CPI (All Urban Consumers) notified by the

Bureau of Labor Statistics for the month of January 2012.

Water Use Charges

Water Use Charge will be paid on units delivered basis and will be indexed with

Wholesale Price Index (WPI) annually from the date of COD. The first such

adjustment shall be due after one year of commercial operation from COD, according

to the formula:

WUC (REV) = Rs 0.1500/kWh * WPI (REV)/ 209.470

Where;

WUC (REV) The revised Water Use Charge component indexed with Whole Sale

Price Index (WPI)

WPI (REV) the Revised Wholesale Price Index (Manufacturers ) / or alternative

index as determined by the Authority.

WPI (REF) the Wholesale Price Index (Manufactures) of July 2011 / or alternative

index as determined by the Authority notified by the Federal Bureau

of Statistics.

Note: - At the time of this determination, the Authority is still in the process of establishing

an alternative index for WPI (Manufacturers) which has been discontinued by FBS

since August 2011. Pending the determination of the alternative index by NEPRA the

last available WPI (Manufacturers) for the month of July 2011 has been used as

reference. Upon the determination of the alternative indexation by NEPRA, the

reference indexation values shall be revised to the alternative index value for the

month of January 2012.

iii) Insurance

Insurance cost component of tariff, in case insurance is denominated in foreign

currency, will be adjusted on account of PKR/US$ exchange rate variation at COD

and thereafter on an annual basis at actual subject to the maximum of 1.35% of the

EPC cost according to the following formula:

22


(Case No. NEPRA/TRF-177/CEPL-201 1)

I (REV) = Rs. 183 .0300/kW/M * ER (rev)/84.00

Where;

I (REV) Revised Insurance cost component of tariff adjusted with the

exchange rate variation (PKR/US$)

ER (REV) The Revised TT & OD selling rate of US dollar.

iv) Adjustment for KIBOR variation

The interest part of fixed charge component will remain unchanged throughout the

term except for the adjustment due to variation in interest rate as a result of quarterly

variation in three (3) month KIBOR, while premium over KIBOR remaining the same

i.e. 3%, according to the following formula:

A I = P (REV) * (KIBOR (REV) - 11 .88%)/4

Where;

0 I the variation in interest charges applicable corresponding to variation

in three month KIBOR. A I can be positive or negative depending

upon whether KIBOR (REV) > or < 11.88%. The interest payment

obligation will be enhanced or reduced to the extent of A I for each

quarter under adjustment applicable on quarterly basis.

P (REV) the outstanding principal (as indicated in the attached debt service

schedule to this order at Annex-II) on a quarterly basis at the relevant

quarterly calculations dates.

v) Return on Equity

Return on equity (ROE) as well as Return on Equity during Construction (ROEDC)

component of tariff shall be adjusted for variation in PKR/US$ exchange rate

according to the following formula:

ROE (REV) = ROE (REF) * ER (REV)/84

ROEDC (REF) = ROEDC (REF) * ER(Rev)/84

23 fi


(Case No . NEPRA/TRF-177/CEPL-2011)

Where;

ROE (REV) Revised Return on Equity component of tariff expressed in

Rs/kW/M adjusted with exchange rate variation (PKR/US$).

ROEDC (REV) = Revised Return on equity during construction component of

tariff in Rs/kW/M adjusted with exchange rate variation

(PKR/US$).

ROE (REF)

ROEDC (REF)

ER (REV)

Note: -

Reference Return on Equity component of tariff expressed in

Rs/kW/M as adjusted at COD.

Reference Return on equity during construction component

of tariff expressed in Rs/kW/M as adjusted at COD.

Revised TT and OD selling rate (PKR/US$) as notified by the

National Bank of Pakistan for the latest available month.

The Petitioner shall submit relevant documents to the Authority

within 90 days of COD for adjustment of relevant tariff components.

Adjustment on account of WPI , foreign exchange variation and

KIBOR variation will be approved and announced by the Authority

after receipt of the Petitioner ' s request for adjustment in accordance

with the requisite indexation mechanism stipulated hereinabove.

V. Other Terms and Conditions of Tariff

Design & Manufacturing Standards:

Hydel Power Generation system shall be designed, manufactured and tested in accordance

with the latest IEC standards or other equivalent standards. All plant and equipment shall be

new and of standard quality.

Power Curve of the Hydel Power Complex:

The power curve of the Hydel Power plant shall be verified by the Power Purchaser , as part

of the Commissioning tests according to the latest IEC standards and shall be used to measure

the performance of the hydel generating units.


Emissions Trading/Carbon Credits:

The Petitioner shall process and obtain emissions/carbon credits expeditiously and credit the

proceeds to the Power Purchaser as per the policy issued by the Federal Government and

agreed terms between the Petitioner and the power producer.

A

25

Annex-I

CHENAB ENERGY ( Pvt.) LIMITEDREFERENCE TARIFF

Variable VariableWater Use Fixed O&M Fixed 0 Return on

ROE During Withholding Loan Interest Total

Year O&M O&M Charge Local & M ForeignInsurance

Equity (ROE)Construction

Tax @7 .5°/o Repayment Charges TariffLocal Foreign ( ROEDC)

Rs./kWh Rs ./kWh Rs ./kWh Rs. I kW/M Rs. / kWIM Rs. I kW/M Rs. / kW/M Rs . / kW/M Rs . I kW/M Rs . / kWIM Rs ./kW/M Rs. / kWh

1 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 613.8228 63.1788 50.7751 686.3645 2,111.9682 7.9712

2 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 613.8228 63.1788 50.7751 794.3371 2,003.9956 7.9712

3 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 613.8228 63.1788 50.7751 919.2950 1,879.0377 7.9712

4 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 613.8228 63.1788 50.7751 1,063.9101 1,734.4226 7.9712

5 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 613.8228 63.1788 50.7751 1,231.2747 1,567.0580 7.9712

6 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 613.8228 63.1788 50.7751 1,424.9676 1,373.3651 7.9712

7 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 613.8228 63.1788 50.7751 1,649.1305 1,149.2022 7.9712

8 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 613.8228 63.1788 50.7751 1,908.5566 889.7761 7.9712

9 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 613.8228 63.1788 50.7751 2,208.7933 589.5394 7.9712

10 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 613.8228 63.1788 50.7751 2,556.2605 242.0721 7.9712

11 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

12 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

13 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

14 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

15 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

16 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

17 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

18 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

19 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

20 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

21 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

22 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

23 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

24 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

25 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

26 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

27 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

28 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

29 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

30 0.0905 0.0905 0.1500 109.9598 27.4899 183.0300 641.5906 63.1788 50.7751 - - 2.4683

Levelized Tariff 0.0905 0.0905 0.1500 109 .9598 27.4899 183 .0300 623 .4913 63.1788 50 .7751 840.7401 983.2441 6.0552

Levelized Tariff (1-30 years) discounted at 10% per annum = US Cents 7.2085/kWh at reference exchange rate of 1 US$=Rupees 84.00.

26

Annex-IICHENAB ENERGY ( Pvt.) LIMITED

Debt Servicinq ScheduleLoca l a Annual A l D bt

Principal Repayment Mark-Up Balance Debt PrincipalAnnual nnua eInterest Servicing

Period Service Repayment Rs./kW/Month Rs./kW/MonthMillion Rs Million Rs . Million Rs . Million Rs . Million Rs. Rs./kW/Month

827.7509 9.3022 30.7923 818.4487 40.0945818.4487 9.6482 30.4463 808.8005 40.0945808.8005 10.0071 30.0874 798.7934 40.0945798.7934 10.3794 29.7151 788.4140 40.0945

1 827.7509 39.3369 121.0411 788.4140 160.3780 686.3645 2,111.9682 2,798.3327788.4140 10.7655 29.3290 777.6485 40.0945777.6485 11.1660 28.9285 766.4825 40.0945766.4825 11.5814 28.5131 754.9011 40.0945754.9011 12.0122 28.0823 742.8889 40.0945

2 788.4140 45.5250 114.8530 742.8889 160.3780 794.3371 2,003.9956 2,798.3327742.8889 12.4590 27.6355 730.4299 40.0945730.4299 12.9225 27.1720 717.5074 40.0945717.5074 13.4032 26.6913 704.1041 40.0945704.1041 13.9018 26.1927 690.2023 40.0945

3 742.8889 52.6866 107.6914 690.2023 160.3780 919.2950 1,879.0377 2,798.3327690.2023 14.4190 25.6755 675.7833 40.0945675.7833 14.9554 25.1391 660.8279 40.0945660.8279 15.5117 24.5828 645.3162 40.0945645.3162 16.0887 24.0058 629.2275 40.0945

4 690.2023 60.9748 99.4032 629.2275 160.3780 1,063.9101 1,734.4226 2,798.3327629.2275 16.6872 23.4073 612.5402 40.0945612.5402 17.3080 22.7865 595.2322 40.0945595.2322 17.9519 22.1426 577.2804 40.0945577.2804 18.6197 21.4748 558.6607 40.0945

5 629.2275 70.5668 89.8112 558.6607 160.3780 1,231.2747 1,567.0580 2,798.3327558.6607 19.3123 20.7822 539.3483 40.0945539.3483 20.0308 20.0638 519.3176 40.0945519.3176 20.7759 19.3186 498.5417 40.0945498.5417 21.5488 18.5458 476.9929 40.0945

6 558.6607 81.6677 78.7103 476.9929 160.3780 1,424.9676 1,373.3651 2,798.3327476.9929 22.3504 17.7441 454.6426 40.0945454.6426 23.1818 16.9127 431.4608 40.0945431.4608 24.0442 16.0503 407.4166 40.0945407.4166 24.9386 15.1559 382.4780 40.0945

7 476.9929 94.5150 65.8631 382.4780 160.3780 1,649.1305 1,149.2022 2,798.3327382.4780 25.8663 14.2282 356.6116 40.0945356.6116 26.8286 13.2660 329.7831 40.0945329.7831 27.8266 12.2679 301.9565 40.0945301.9565 28.8617 11.2328 273.0948 40.0945

8 382.4780 109.3832 50.9948 273.0948 160.3780 1,908.5566 889.7761 2,798.3327273.0948 29.9354 10.1591 243.1594 40.0945243.1594 31.0490 9.0455 212.1104 40.0945212.1104 32.2040 7.8905 179.9064 40.0945179.9064 33.4020 6.6925 146.5044 40.0945

9 273.0948 126.5904 33.7877 146.5044 160.3780 2,208.7933 589.5394 2,798.3327146.5044 34.6445 5.4500 111.8599 40.0945111.8599 35.9333 4.1612 75.9265 40.094575.9265 37.2700 2.8245 38.6565 40.094538.6565 38.6565 1.4380 (0.0000) 40.0945

10 146.5044 146.5044 13.8736 0.0000 160.3780 2,556.2605 242.0721 2,798.3327

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21

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National Electric Power Regulatory Authority Energy pvt... · 2020. 2. 25. · Proceedings Comments from Central Power Purchasing Agency (CPPA): 6. CPPA in its comments submitted