NEPRA reserves judgment on tariff cut for Thar coal projects

Power ministry insists on reduction, companies and Sindh government oppose cut

ISLAMABAD: The Sindh government and private power companies have opposed a cut in tariff for Thar coal-based power projects, arguing that it would halt investment in the area.

During a public hearing conducted on Tuesday, the National Electric Power Regulatory Authority (Nepra) reserved the judgment on a case regarding reduction in tariff of coal-based power projects.



The Sindh government and power companies’ representatives opposed the cut and said that investment in Thar would stop if such a rule was passed.

Sindh demanded that the existing tariff should be maintained for at least two years in order to boost investment in Thar. The representative of Sindh Engro Coal Mining Company (SECMC) said that the cost of power projects would come down significantly if mining capacity reaches international levels at Thar.

SECMC CEO said that they would save $157 million following increase in coal mining at Thar. He said that seven companies were working to install power plants in Thar block-2 and additional four companies have expressed interest to set up power plants. In order to keep this investment momentum, he requested to maintain the existing tariff.

However, the Ministry of Water and Power insists Nepra cut the upfront tariff up to 20% for new Thar coal-based power projects due to falling costs and interest rates.



In a letter to the regulator, the Ministry of Water and Power said that Nepra had determined a high tariff due to multiple reasons.

The power ministry further said that after bringing investors to Thar-based power generation projects especially following the China-Pakistan Economic Corridor (CPEC) investments, it is necessary to review the tariff assumptions.

Published in The Express Tribune, March 29^th, 2017.

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