NEPRA saves billions by reducing tariff of 12 thermal power plants

NEPRA has reduced the Return on Equity (RoE) and Return on Equity During Construction (RoEDC) components of 12 thermal power plants, which will result in an estimated saving of Rs. 182 billion for the remaining life of these projects.

In a press release, NEPRA said.“In a landmark decision on Friday, Nepra has reduced the Return on Equity (RoE) and Return on Equity During Construction (RoEDC) components of 12 thermal power plants having a cumulative net capacity of 2,412 MW. The reduction in tariff will result in an estimated saving of Rs182bn over the remaining life of the projects.”

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The application of tariff reduction with NEPRA was filed by the Central Power Generation Agency (CPPA-G). The latter request to revise the RoE and RoEDC components was based on 17 percent return and fixed exchange rate per USD without dollar indexation for local equity, whereas revised ROE and ROEDC components on the basis of 12pc return with dollar indexation for foreign equity.

NEPRA under the prevailing rules and regulations admitted the applications and subsequently conducted a hearing on March 03, 2021, in which it deliberated on the applications.

After detailed deliberations, the Authority decided on 2^nd April to revise the RoE and RoEDC components for local equity based on 17 percent return and fixed exchange rate of Rs. 148/USD without future indexation and RoE and RoEDC components for foreign equity on the basis of 12 percent return with future dollar indexation.

It is worth mentioning here that on 25^th February, Nepra had reduced the Return on Equity (RoE) of three nuclear power generation plants by 931MW which will result in saving of approximately Rs 2.05 billion annually for the next 25-37 years.

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Nepra, in a landmark decision, has reduced the Return on Equity (RoE) component of three nuclear power generation plants including C-2, C-3, and C-4, and has slashed the tariff by Re. 0.2515 per unit.