Hydropower projects’ tariff set at Rs5 per unit

The National Electric Power Regulatory Authority (Nepra) has set a new average generation tariff for hydropower projects for FY23 at Rs4.96 per unit – an increase of 29% against Rs3.85 per unit in FY22.

Hydropower contributes up to 50% in controlling electricity prices.

Under the new tariff, the electricity generation cost of independent power producers (IPPs) has been set up to Rs78 per unit.

The power regulator made it to meet its annual revenue requirement of Rs155 billion.

The Rs1.11 per unit increase in generation tariff would not apply to the average distribution tariff for end-consumers.
The capacity payment of hydropower projects is zero and the IPPs are purchasing electricity from then on a take-on-pay basis.

For the first time, Nepra has permitted Rs1.10 per unit water use charges to Azad Jammu and Kashmir’s (AJK) Neelum-Jhelum Hydropower project equivalent to the net hydel profit allowed to the provinces, especially Khyber-Pakhtunkhwa and Punjab.

The move to allow AJK to be treated like the provinces in payment of water rights will increase the region’s share to Rs5.44 billion in FY23 against Rs712 million in the previous fiscal year.

K-P’s share on account of the net hydel profit went up to Rs28.6 billion for FY23 against Rs24.56 billion in FY22.
Similarly, Punjab’s net hydel profit share increased to Rs11.65 billion for FY23 against Rs10.5 billion in FY22.

The combined shares of the three stakeholders, K-P, Punjab and AJK, has increased to Rs45.9 billion for FY23 in comparison with Rs35.9 billion in FY22.

The 969MW Neelum-Jhelum Hydropower project has been supplying electricity to the national grid since 2018 without a formal agreement with the AJK government.

Nepra has also ordered the Central Power Purchasing Authority (CPPA) to conduct the capacity status of the Water and Power Development Authority (Wapda) hydropower stations.

It directed that the capacity status should be conducted separately and sought the report of all the stations.

Besides, Wapda has to pay Rs40 billion to the provinces as water usage profit.

A sum of Rs15.6 million will be paid to the Indus River System Authority as charges.

According to a World Bank study, 17 to 18 more major dams could be built in Pakistan.