Investors discouraged: NEPRA proposes cut in solar, wind power tariffs

Its members felt tariffs were at higher levels that should be reduced.

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has recommended a significant reduction in solar and wind power tariffs that may discourage future investment in renewable energy resources.

The recommendation came after member tariff from Punjab, Khawaja Naeem, completed his tenure in Nepra.

Taking a suo motu notice, the regulator has proposed a cut of Rs1.44 per unit in the tariff for solar power projects in Balochistan. The new price will be Rs9.45 per unit.

It has also proposed a reduction of Rs1.53 per unit for solar projects in Punjab that will take the tariff to Rs10 per unit.

For wind power plants, Nepra proposed a hefty tariff reduction of Rs4.10 per unit. The new tariff will be Rs8.60 per unit. It has decided to set per megawatt cost of solar power at $1.8 and per megawatt cost of wind power at $1.93.



According to Nepra officials, higher tariffs were fixed for wind, solar and some independent power plants in the past two years when Naeem was working as member tariff. He had been a close relative of Water and Power Minister Khawaja Muhammad Asif.

The regulator noted that consumers would have to pay an additional Rs15 billion in the next 20 years because of the high tariffs.

After Naeem’s term ended, other members and Nepra chairman realised that tariffs for solar and wind power projects were high, which should be brought down to ease the burden on consumers.

Nepra also took the opinion of different experts who suggested that the tariffs should be reduced.

Now, it has sought comments of stakeholders including the Ministry of Water and Power. It will announce its decision after holding a hearing.

Last year, foreign investors had warned the government and power regulator that they would stop work on solar power projects worth billions of dollars because of the cut in tariff.

Prospective foreign investors, who have planned to establish solar energy projects in Pakistan, are increasingly worried over the proposed reduction in tariff - the high rate of which was a major incentive for them.

They are also uncertain whether their projects would see the light of day, though they have invested millions of dollars in feasibility studies and acquired letter of intent from the government.

Published in The Express Tribune, June 15^th, 2016.

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