KARACHI: K-Electric’s board of directors has given the go-ahead for setting up a 900-megawatt gas-fired power plant worth $1 billion.
The board, however, says the power regulator’s pending decision on end-consumers tariff is critical for the future of the project, according to a bourse filing on Thursday.
“The board noted with concern that favourable result of the company’s review petition on the Multi Year Tariff (MYT) determination 2017, pending with the National Electric Power Regulatory Authority (Nepra), is critical for financing and development of this mega project,” said K-Electric Director Finance and Company Secretary Muhammad Rizwan Dalia.
Earlier this year, Nepra announced a fixed (cost-based) tariff for K-Electric consumers for a period of seven years. The tariff was Rs3.50 per unit lower than the previous tariff.
Believing that the new tariff did not support investment in projects other than those covered in the tariff, the company submitted a review petition and urged Nepra to award a flexible (performance-based) tariff to enable it to generate additional investment from the consumers to initiate need-based projects.
An official closely monitoring the developments said “Nepra may announce the revised tariff in a week or 10 days.”
A K-Electric official, however, said the regulator may take much more time to announce the decision.
The decision would also enable China’s Shanghai Electric Power whether to go ahead with its initial plan of acquiring a majority stake (66.4% at a cost of $1.77 billion) in K-Electric.
The K-Electric official added “this 900MW project is not covered in the latest multi-year tariff against which they have submitted a review petition.”
A press statement of the company added that the project at Bin Qasim Power Station-III comprised two units of 450MW each.
“The first unit is targeted to start production by the summer of 2018 whereas the second unit is expected to be commissioned by the end of 2019. Once completed, BQPS-III will represent one of the largest private sector investments of its kind in the country’s power sector,” it added.
Published in The Express Tribune, August 11th, 2017.