Tariff for Wind Power Projects in Pakistan

50 MW Lakeside and 50 MW Three Gorge First Wind Farm

Presented By:
Farman Ali
2019-MS-RES-21
NEPRA ACT – Mandate of NEPRA
• NEPRA was established under an Act of Parliament in 1997.
• NEPRA is the Sole Regulator of Power Sector with the following mission:
“to develop and pursue a Regulatory Framework, which ensures the provision of
safe, reliable, efficient and affordable electric power to the electricity consumers of
Pakistan; we shall facilitate the transition from a protected monopoly service
structure to a competitive environment where several power sector entities
function in an efficiency oriented or market driven environment and shall
maintain a balance between the interests of the consumers and service providers in
unison with the broad economic and social policy objectives of the Government of Pakistan.”
NEPRA ACT – Functions

 Licensing

 Tariff

 Performance Standards

 Consumer Affairs

 Monitoring and Enforcement

Tariff Regime
• Cost Plus Tariff – is one in which RE IPP is paid its actual cost plus an agreed profit. In this mode, the IPP is
required to submit a tariff petition to NEPRA for award of tariff for a particular project along with the tariff
proposed for the project and supporting documents evidencing the cost.

• Upfront Tariff – Upfront Tariff is one which is determined and announced by the Regulator based on its own
scrutiny and calculations with certain terms and conditions. The project sponsors may accept the Upfront
Tariff based on its viability for their project.

• Competitive Tariff – is one in which either is a bench mark tariff for investors to compete or an open
competition, is invited having detailed studies on the subject project. The Investor qualifying the technical &
financial evaluation and offering the lowest tariff wins the competition for development of the project.
Tariff Procedure
• The Company/ Licensee files a petition for determination of its tariff according to NEPRA Tariff Standard
Procedure Rules -1998;

• The Authority on the basis of information decides whether prima facie case exists for admission of the tariff
petition;

• In case Authority admits the petition for consideration it gives notice to all the stakeholders through
advertisement in the national newspapers inviting them for intervention to participate in the tariff
proceedings through personal participation or through written comments;

• After public hearing, based on the evidence provided by the petitioner and the stakeholders, the Authority
after due diligence determines the tariff and recommends to the Federal Government for notification in the
official gazette;
Criteria for Tariff determination
• Tariffs should allow licensees the recovery of any and all costs prudently incurred to meet the demonstrated
needs of their customers

• Tariffs should reflect marginal cost principles to the extent feasible, keeping in view the financial stability of
the sector

• Tariff regime should clearly identify inter-class and inter-region subsidies

• Tariffs should, to the extent feasible, reflect the full cost of service to consumer groups with similar service
requirements;

• Tariffs should take into account Government subsidies or the need for adjustment to finance rural
electrification in accordance with the policies of the Government;
Components of determination of Tariff for generation
project
Energy Charge
-Fuel
-Variable O&M
Capacity Charge
-Fixed O&M
-Local
-Foreign
-Return on Equity
-Return on Equity during Construction
-Insurance
-Withholding Tax
-Debt Repayment
-Interest Payments
Wind Power Project

50 MW Lakeside Energy (Pvt.) Limited

• Letter of Intent (101") was issued to LEPL by
Directorate of Alternative Energy, Government of
Sindh ("GOS") on July 24, 2015 for establishing a 50
MW wind power generation project. On January
03, 2018, the validity of the said LOI was extended
by GOS till December 20, 2018.
• October 12, 2017 GOS experts meeting was
conducted to review the feasibility study.
• The generation license was issued by NEPRA to
LEPL on November 27, 2017.
• Tariff awarded by NEPRA, US cents 4.7154/KWh.
Tariff Filed by Lakeside Energy (Pvt.) Limited
No. Tariff petition Components Lakeside Energy (Pvt.) Limited

1 Sponsors Naveena Exports Limited and Alkaram Textile Mills (Pvt.) Limited.
2 Capacity 50 MW
3 Project location Jhimpir, Nooriabad, District Thatta, Sindh

4 Land area 345 Acres (Allocated by GOS)

5 Concession period 25 Years
6 Power purchaser Central power purchaser agency guarantee Ltd.
7 Wind Turbine Siemens Gamesa Renewable Energy
8 Model G114-2.0
9 Plant capacity factor 38%

10 Annual energy generation 166.440 GWh

11 EPC contractor Hydro china Corporation

12 Project cost USD in millions

13 EPC cost 78.1

14 Project development cost 3.3

Tariff Filed by Lakeside Energy (Pvt.) Limited
No. Tariff petition Components Lakeside Energy (Pvt.) Limited

15 Insurance during const. 0.5

16 Financial chargers 2.020
17 Interest during construction 3.5
18 Total project cost 87.420

19 Finance structure Debt 75% and Equity 25%

20 Debt composition 50% Local and 50% Foreign loan
21 Debt repayment period 13 Years
22 Return of equity 15% IRR based
23 O&M cost USD 1.95 million per annum
24 Insurance cost USD 0.39 million per annum

25 PKR/KWh US ￠ /KWh
26 Levelized Tariff 7.5973 7.2355

27 Exchange rate 1USD = PKR 105

ISSUES FRAMED
Following is the list of issues that were framed by the Authority for the hearing:
1. Whether the details provided for EPC cost are sufficient and whether the claimed EPC cost is competitive
and comparative and based on the firm and final agreement(s)?
2. Whether the NEPRA (Selection of EPC Contractor by IPPs) Guidelines, 2017 have been fully complied with?
3. Whether the details provided for Non-EPC cost are sufficient and claimed Non-EPC cost is justified? Also
provide justification for land requirement as claimed by the petitioner.
4. Whether the claimed annual energy generation and corresponding plant capacity factor are reasonable
and justified? And
5. Whether the petitioner's proposed wind turbine technology satisfies the international standards of quality
and operation?
6. Whether the claimed O&M costs are justified? Provide rationale of claiming foreign & local O&M cost.
7. Whether the claimed insurance during operation cost is justified?
8. Whether the claimed return on equity is justified?
9. Whether the claimed financing/debt terms are justified?
Cont…
10. Whether the claimed construction period is justified?
11. Any other issue with the approval of the Authority?
The issue wise submissions of the petitioner and the Authority's findings and decision.
ISSUES FRAMED and decisions taken by NEPRA

Whether the details provided for EPC cost are sufficient and whether the claimed EPC cost is competitive
and comparative and based on the firm and final agreement(s)?

Filed by Petitioner Filed by Authority

The petitioner has claimed USD 78.100 million on The Authority further noted that margins for EPC
account of Engineering, Procurement an Construction contractor, transportation costs, level of performance
("EPC") cost in its tariff petition. In this regard the being approved in this determination etc. should also
petitioner has submitted copies of EPC contracts be taken into account to set the EPC cost. After
signed on November 16, 2017. The breakup of the detailed analysis of the available information and
EPC cost as provided by the petitioner is given factoring in all the aforesaid factors, the Authority has
hereunder: decided to approve the EPC cost of LEPL as USD
57.940 million.
EPC Cost USD in millions
Off-Shore contract 66.900
ON-Shore contract 11.200
Total 78.100
ISSUES FRAMED and decisions taken by NEPRA

Whether the details provided for Non-EPC cost are sufficient and claimed Non-EPC cost is justified?

Filed by Petitioner Filed by Authority

The petitioner has claimed USD 9.320 million on The authority awarded USD 5.966 million on account
account of non-EPC cost. Detail of non-EPC cost as of non-EPC cost. Detail of non-EPC cost as provided
provided by the petitioner is hereunder: by the petitioner is hereunder:

Non-EPC Cost USD in Millions Non-EPC Cost USD in Millions

Project development cost 3.300 Project development cost 2.500
Insurance during construction 0.500 Insurance during construction 0.290
Financial fee and Charges 2.020 Financial fee and Charges 1.215
Interest during construction 3.500 Interest during construction 1.961
Total Non EPC cost 9.320 Total Non EPC cost 5.966
ISSUES FRAMED and decisions taken by NEPRA

Whether the claimed annual energy generation and corresponding plant capacity factor
are reasonable and justified?

Filed by Petitioner Filed by Authority

• The petitioner has claimed annual energy
production of 166.440 GWh
• Corresponding net plant capacity factor of 38%.
The petitioner submitted Wind Resource and
Energy Yield.
• Assessment Report ("Energy Report") conducted
by the technical consultant hired by LEPL.
• In view of these considerations and primarily to
ensure the bankability of the project, the
• Authority has decided to set the tariff of LEPL at
net annual plant capacity factor of 38.54%.
• However, keeping in view the assessed potential of
higher generation
ISSUES FRAMED and decisions taken by NEPRA
Whether the claimed O&M costs are justified? Provide rationale of claiming foreign &
local O&M cost.
Filed by Petitioner
• The petitioner has claimed O&M cost of USD 1.95
million per annum i.e. USD 39,000 per MW per
annum.
• The petitioner submitted the O&M contract for the
initial 2 years (i.e. warranty period) signed with
Hydro china International Engineering Company
Ltd. on November 16, 2017.
• The O&M cost has been claimed in the ratio of
39:61 for local and foreign costs respectively.
Filed by Authority
• Authority noted that the level of performance
being approved in this determination is relatively
higher as compared to what is allowed in India and
China
• which shall require more robust warranties from
the O&M contractor that shall also result in
comparatively higher O&M cost. Considering all
these factors, the Authority has decided to
approve O&M cost of USD 23,000 per MW per
annum for LEPL.
• In view of the claim of the petitioner and other
project companies, the Authority has decided to
share the approved O&M cost into local and
foreign components in the ratio of 50:50.
ISSUES FRAMED and decisions taken by NEPRA
Whether the claimed insurance during operation cost is justified?
Filed by Petitioner
• The petitioner has claimed USD 0.39 million per
annum on account of insurance during operation
based on 0.5% of claimed EPC cost.
• The petitioner submitted that the insurance cost
consists of operations all risk insurance for the
project, as well as business-interruption insurance;
these are standard insurances required by all
lenders' and also set out under the EPA.
• Since the Pakistan Insurance/Reinsurance industry
does not have sufficient capacity and expertise to
manage such huge risks entirely.
Filed by Authority
• The Authority has allowed insurance during
operation at the rate of 0.4% of the EPC cost in the
most recent determination of solar energy
projects.
• The data of actual insurance of operational wind
power projects has also been analysed for this
purpose which shows that insurance during
operation has been secured at the rate of even less
than 0.4%.
• So, Authority has decided to allow insurance during
operation at maximum limit of 0.4% of the
approved EPC cost.
ISSUES FRAMED and decisions taken by NEPRA
Whether the claimed return on equity is justified?
Filed by Petitioner
• The petitioner claimed return on equity (ROE) of
15% (IRR basis) on invested equity net of
withholding tax.
• The petitioner submitted that the withholding tax
component has not been identified as a separate
line item in the tariff as the same is assumed to be
a pass-through item under the tariff.
Filed by Authority
• Authority has decided to approve the ROE for the
petitioner at the rate of 14%.
• Regarding the petitioner's claim of withholding tax
on dividend, the Authority noted that it has
principally decided not to allow this tax as pass
through in any of the tariff cases.
ISSUES FRAMED and decisions taken by NEPRA
Whether the claimed financing/debt terms are justified?
Filed by Petitioner
• The petitioner has submitted that 50% foreign loan
and 50% local loan shall be secured for the project
based on debt to equity ratio of 75:25.
• The interest rate of LIBOR plus 4.5% and KIBOR
plus 2.5% for foreign and local loans respectively
has been claimed in the petition for the debt
servicing period of thirteen years.
• The petitioner has submitted indicative term sheet
signed with the lenders (United Bank Ltd. and
FMO) with the petition.
Filed by Authority
• The petitioner claimed tariff on debt: equity ratio
of 75:25.
• The Authority has noted that the State Bank of
Pakistan ("SBP") has issued concessionary financing
scheme in June, 2016. Under the said scheme,
renewable energy projects having capacity of up to
50 MW can secure loan up to the limit of Rs. 6
billion at the rate of 6% for the minimum debt
servicing tenor of minimum ten years.
• The Authority has considered that a number of
under process wind power projects have claimed
their tariffs on debt: equity ratio of 80:20.
Tariff Filed by Lakeside Energy (Pvt.) Limited and decisions by NEPRA

No. Tariff petition Components Lakeside Energy (Pvt.) Limited Decisions by NEPRA

1 Capacity 50 MW 50 MW

2 Concession period 25 Years 25 Years

3 Plant capacity factor 38% 38.54%

4 Annual energy generation 166.440 GWh

5 Project cost USD in millions USD in millions

6 EPC cost 78.1 57.940

7 Project development cost 3.3 2.5

8 Insurance during const. 0.5 0.5% of the EPC cost

9 Financial chargers 2.020 2.5% of the debt portion of the capital cost

10 Interest during 3.5

construction
11 Total project cost 87.420
Tariff Filed by Lakeside Energy (Pvt.) Limited and approved by
NEPRA
No. Tariff petition Lakeside Energy (Pvt.) Limited Decisions by NEPRA
Components
12 Finance structure Debt 75% and Equity 25% Debt 80% and Equity 20%
13 Debt composition 50% Local and 50% Foreign loan
14 Debt repayment period 13 Years 10 years
15 Return of equity 15% IRR based 14%
16 O&M cost USD 1.95 million per annum USD 23,000 per MW per yea
17 Insurance cost USD 0.39 million per annum 0.4% of the allowed EPC Cost

18 PKR/KWh US ￠ /KWh PKR/KWh US ￠ /KWh

19 Levelized Tariff 7.5973 7.2355 5.66 4.7154

20 Exchange rate 1USD = PKR 105 1USD = PKR 120

Levelized Tariff of Lakeside energy (Pvt.) Limited
O&M
Return on Equity during
Insurance Return on Equity Loan Repayment Interest charges Tariff
Years Local Foreign Construction
Rs./KWh Rs./KWh Rs./KWh Rs./KWh Rs./KWh Rs./KWh Rs./KWh Rs./KWh
1 0.4088 0.4088 0.1648 1.272 0.1146 2.7397 2.1197 7.2283
2 0.4088 0.4088 0.1648 1.272 0.1146 2.9078 1.9516 7.2283
3 0.4088 0.4088 0.1648 1.272 0.1146 3.0862 1.7732 7.2283
4 0.4088 0.4088 0.1648 1.272 0.1146 3.22756 1.5838 7.2283
5 0.4088 0.4088 0.1648 1.272 0.1146 3.4766 1.3828 7.2283
6 0.4088 0.4088 0.1648 1.272 0.1146 3.69 1.1695 7.2283
7 0.4088 0.4088 0.1648 1.272 0.1146 3.9164 0.943 7.2283
8 0.4088 0.4088 0.1648 1.272 0.1146 4.1567 0.7027 7.2283
9 0.4088 0.4088 0.1648 1.272 0.1146 4.4118 0.4476 7.2283
10 0.4088 0.4088 0.1648 1.272 0.1146 4.6825 0.1769 7.2283
11 0.4088 0.4088 0.1648 1.272 0.1146 - - 2.3689
12 0.4088 0.4088 0.1648 1.272 0.1146 - - 2.3689
13 0.4088 0.4088 0.1648 1.272 0.1146 - - 2.3689
14 0.4088 0.4088 0.1648 1.272 0.1146 - - 2.3689
15 0.4088 0.4088 0.1648 1.272 0.1146 - - 2.3689
16 0.4088 0.4088 0.1648 1.272 0.1146 - - 2.3689
17 0.4088 0.4088 0.1648 1.272 0.1146 - - 2.3689
18 0.4088 0.4088 0.1648 1.272 0.1146 - - 2.3689
19 0.4088 0.4088 0.1648 1.272 0.1146 - - 2.3689
20 0.4088 0.4088 0.1648 1.272 0.1146 - - 2.3689
21 0.4088 0.4088 0.1648 1.272 0.1146 - - 2.3689
22 0.4088 0.4088 0.1648 1.272 0.1146 - - 2.3689
23 0.4088 0.4088 0.1648 1.272 0.1146 - - 2.3689
24 0.4088 0.4088 0.1648 1.272 0.1146 - - 2.3689
25 0.4088 0.4088 0.1648 1.272 0.1146 - - 2.3689
Levelized 0.4088 0.4088 0.1648 1.272 0.1146 2.3484 0.9411 5.6584
Wind Power Project

50 MW Three Gorge First Wind Farm

• Three Gorges First Wind Farm (Pvt.) Ltd. Filed a
tariff petition to NEPRA on June 09, 2011, for 49.50
MW wind power project at Jhimpir, district Thatta
in the province of Sind.
• The generation license was issued by NEPRA on
July 27, 2011.
• Tariff awarded by NEPRA, 11.8 PKR/KWh.
Tariff Filed by Three Gorge First Wind Farm
No. Tariff petition Components Three Gorge First Wind Farm
1 Capacity 49.50 MW
2 Project location Jhimpir, District Thatta, Sindh
3 Land area 1,150 Acres (4.69 sq km)
4 Concession period 20 Years
5 Power purchaser Central power purchaser agency guarantee Ltd. And NTDC
6 Wind Turbine 1.50 MW each capacity
7 Model GW 1500/77
8 Plant capacity factor 31.99%
9 Annual energy generation 138.70 GWh
10 EPC contractor • Off-Shore: China Huashui Hydro power Development corporation
• On-Shore: China international water and electric corporation
11 Project cost USD in millions
12 EPC cost ON-shore and Off-shore (Total EPC = 110.315)
13 Non EPC cost 2.989
14 Project development cost 4.013
15 Land Cost 0.098
Tariff Filed by Lakeside Energy (Pvt.) Limited
No. Tariff petition Components Lakeside Energy (Pvt.) Limited
16 Financial chargers 3.099
17 Interest during construction 4.856
18 Duties and taxes 0.419
19 Pre-COD insurance 1.921
20 Sinosure fees 7.039
21 Total project cost 134.749
22 Finance structure Debt 80% and Equity 20%
23 Debt composition 100% Foreign (from Chinese financial institutions)
24 Debt repayment period 9 year plus 12 months grace period
25 Return of equity 18%
26 Project operation cost Years 1-2 3-5 5-9 10-20
O&M cost 2.485 3.681 3.765 4.081
Insurance 1.319 1.319 1.319 1.319
Total 3.804 5.000 5.084 5.400
27 PKR/KWh US ￠ /KWh
28 Levelized Tariff 12.51 14.72
29 Exchange rate 1USD = PKR 85
Issues Framed
Based on the submissions of the petitioner, comments offered by stakeholders as well as proceeding of the
case, following main issues were framed for discussion:
1. Whether net annual energy generation as claimed by the petitioner is justified?
2. Whether construction period and pattern of funds injections claimed by the petitioner are justified?
3. Whether EPC cost as claimed by petitioner is justified?
4. Whether other project cost as claimed by the petitioner is justified?
5. Whether the terms and conditions of debt servicing claimed by the petitioner are justified?
6. Whether return on equity as claimed by petitioner is justified?
7. Whether O&M cost claimed by the petitioner is justified?
8. Whether insurance during operations as claimed by petitioner is justified?
9. Whether other matters raised by the petitioner are justified?
ISSUES FRAMED and decisions taken by NEPRA
Whether net annual energy generation as claimed by the petitioner is justified?
Filed by Petitioner
• The petitioner has submitted that its net annual
energy will be 138.70 MWh, on the basis of 7.4
m/s wind speed with the selection of turbine
Xinjiang Goldwind Science and Technology Co.
Limited.
• The net annual plant capacity factor on the basis of
above benchmark annual energy works out to
31.99%.
Filed by Authority
• The Authority has observed that the petitioner`s
project feasibility report which has been prepared
by Xinjiang Goldwind Science and Technology Co.
Limited China. And this feasibility report also
approved by AEDB in June 22, 2011.
• The authority on the basis of verification exercise
carried out by AEDB approval of benchmark energy
by AEDB and documents evidence allows 138.70
GWh as benchmark of the project.
ISSUES FRAMED and decisions taken by NEPRA

Whether construction period and pattern of funds injections claimed by the petitioner are justified?

Filed by Petitioner Filed by Authority

• The petitioner has requested for allowing project
construction period 18 months. The petitioner has
submitted that it will start construction six months
prior to the financial close through equity injection.
• That means at the time of the financial close
remaining project construction period would be 12
months.
Proposed construction period
• The Authority has considered the aforementioned
request of the petitioner and has found it
reasonable therefore the same is allowed.
• The petitioner is hereby directed to ensure that all
the terms and conditions relating to construction
period in the ,energy purchase agreement confirm
with the aforesaid terms and conditions allowed by
the Authority.

ROE during construction 18 months starting from 6

months prior to
financial close

Interest during construction 12 months starting from the

financial close
 ISSUES FRAMED and decisions taken by NEPRA

Whether EPC cost as claimed by the petitioner is justified?

Filed by Petitioner Filed by Authority

• The petitioner has requested for allowing EPC cost • The petitioner has submitted that the price of both
of US $ 110.315 million and has provided the on shore and off shore contracts is fixed, firm and
following break-up of EPC cost: the contracts were signed and sealed on 13 May,
2011 AEDB.
• In addition to the cost of EPC contract, the
petitioner has also claimed US$ 0.335 million as
charges for the letter of credit to be opened in
USD millions favor of the EPC.
Off shore cost 83.800 • Authority hereby approves the EPC cost of US $
Onshore cost 26.180 110.315 million (inclusive of letter of credit charges
of US $ 0.335 million).
Letter of credit charges 0.335
Total EPC cost 110.315
ISSUES FRAMED and decisions taken by NEPRA

Whether other project costs as claimed by the petitioner are justified?

Filed by Petitioner Filed by Authority

• The petitioner has claimed US$ 24.434 million on • The authority has claimed US$ 0.062 million on
account of other project costs split up under account of other project costs split up under
various heads as given hereunder: various heads as given hereunder:
USD millions USD millions
Non EPC costs 2.989 Non EPC costs 1.100
Project development costs 4.013 Project development costs 2.930
Land Cost 0.098 Land Cost 0.098
Duties and Taxes 0.419 Duties and Taxes 0.419
Pre-COD insurance cost 1.921 Pre-COD insurance cost 1.489
Financial charges 3.099 Financial charges 2.790
Sinosure Fees 7.039 Sinosure Fees 6.806
Interest during construction 4.856 Interest during construction 4.430
Total cost 24.434 Total cost 20.062
ISSUES FRAMED and decisions taken by NEPRA

Whether EPC cost as claimed by the petitioner is justified?

Filed by Petitioner Filed by Authority

• The petitioner has submitted that its entire debt • NTDC has objected to the interest rate claimed by
will be provided by the Chinese banks in US dollars. the petitioner and has submitted that the same
The petitioner has requested for allowing following should be lower than LIBOR plus 3%.
terms for debt:
• The Authority has considered the comments of
NTDC and submissions of the petitioner regarding
Interest rate :Six months LIBOR + 4.80% the issue of circular debt in the power sector.
• The Authority further observed that it has allowed
Debt repayment period :9 years plus 12 months interest rate of 6 months LIBOR plus 4.50% for
grace period foreign financing in its recent determination of a
wind power project.
Repayment schedule basis :Biannual
ISSUES FRAMED and decisions taken by NEPRA
Whether return on equity as claimed by the petitioner is justified?
Filed by Petitioner
• The petitioner has requested for allowing 18%
return on equity (IRR based) net of 7.5%
withholding tax on dividends.
• In support of its claim the petitioner has submitted
that risk perceptions are high for investing in
Pakistan energy sector, there is no history of wind
power projects in Pakistan.
• GOP is only covering the wind speed risk while the
investor is taking the risk of other wind
characteristics (air density, wind frequency
distribution, temperature and humidity), etc.
Filed by Authority
• The 17% return on equity (IRR based) as already
allowed by the Authority in comparable cases
should also be allowed to the petitioner.
• The Authority has already allowed 17% return on
equity (IRR based) to promote wind power sector.
The return on equity allowed to wind power sector
is 2% more than the return on equity allowed in
the case of thermal power projects.
• In view of these facts the Authority has decided to
allow 17% (IRR based) return on equity is allowed.
ISSUES FRAMED and decisions taken by NEPRA
Whether 0 &M costs claimed by the petitioner are justified?

Filed by Petitioner
• The petitioner has submitted that its wind turbine
supplier Goldwind is providing the O & M services.
• The petitioner submits the Chinese experience O &
M costs range between US cents 2.5 per kwh per
year to US cents 2.8 per kwh per year and the O &
M costs claimed are in line with the sponsors
experience in China.
Filed by Authority
• The Authority has found that the O&M costs
requested by the petitioner are considerably on
the higher side in comparison to the O & M costs
allowed by the Authority in comparable cases.

Years USD millions Years USD millions

1-2 2.485 1-2 1.262
3-5 3.681 3-5 2.412
6-9 3.765 6-9 2.099
10-20 4.081 10-20 2.363
ISSUES FRAMED and decisions taken by NEPRA
Whether insurance during operations as claimed by the petitioner is justified?
Filed by Petitioner
• The petitioner has requested for allowing US$
1.319 million per annum as insurance expense in
the post COD period for 20 years of tariff control
period.
• The petitioner has submitted that it has based its
estimates on the quotes received from the
insurance providers.
• The cost of insurance claimed by the petitioner is
about 1.20% of its approved EPC cost.
Filed by Authority
• The Authority considers the request of the
petitioner reasonable and hereby allows the
insurance expense of US$ 1.319 million per annum
claimed by the petitioner.
• This cost will be adjusted at actually incurred
prudent cost upon production of verifiable
documentary evidence at the time of COD, in
accordance with the mechanism prescribed in the
order.
Tariff Filed by Three Gorge First Wind Farm and approved by NEPRA
No. Tariff petition Components Three Gorge First Wind Farm Approved by NEPRA
1 Capacity 49.50 MW
2 Project location Jhimpir, District Thatta, Sindh
3 Land area 1,150 Acres (4.69 sq km)
4 Concession period 20 Years
5 Power purchaser Central power purchaser agency guarantee Ltd. And NTDC
6 Wind Turbine 1.50 MW each capacity
7 Model GW 1500/77
8 Plant capacity factor 31.99%
9 Annual energy generation 138.70 GWh 138.70 GWh
10 EPC contractor • Off-Shore: China Huashui Hydro power Development corporation
• On-Shore: China international water and electric corporation
11 Project cost USD in millions USD in millions
12 EPC cost ON-shore and Off-shore (Total EPC = 110.315) 110.315
13 Non EPC cost 2.989 2.20
14 Project development cost 4.013 3.000
15 Land Cost 0.098
Tariff Filed by Lakeside Energy (Pvt.) Limited and approved by NEPRA
No. Tariff petition Components Lakeside Energy (Pvt.) Limited Approved by NEPRA
16 Financial chargers 3.099 2.790
17 Interest during construction 4.856 4.430
18 Duties and taxes 0.419 0.419
19 Pre-COD insurance 1.921 1.489
20 Sinosure fees 7.039 6.806
21 Total project cost 134.749
22 Finance structure Debt 80% and Equity 20%
23 Debt composition 100% Foreign (from Chinese financial institutions)
24 Debt repayment period 9 year plus 12 months grace period
25 Return of equity 18%
26 Project operation cost Years 1-2 3-5 5-9 10-20
O&M cost 2.485 3.681 3.765 4.081
Insurance 1.319 1.319 1.319 1.319
Total 3.804 5.000 5.084 5.400
27 PKR/KWh US ￠ /KWh
28 Levelized Tariff 12.51 14.72
29 Exchange rate 1USD = PKR 85
Levelized Tariff of Three Gorges First Wind Farm
O&M
Return on Equity during
Insurance Return on Equity Loan Repayment Interest charges Tariff
Years Local Foreign Construction

Rs./KWh Rs./KWh Rs./KWh Rs./KWh Rs./KWh Rs./KWh Rs./KWh Rs./KWh

1 0.4035 0.3702 0.8081 2.7145 0.7645 5.7776 3.1223 14.2216
2 0.4035 0.3702 0.8081 2.7145 0.7645 6.0701 2.8298 14.2216
3 0.5318 0.9467 0.8081 2.7145 0.7645 6.3774 2.5225 14.2216
4 0.5318 0.9467 0.8081 2.7145 0.7645 6.7003 2.1996 14.2216
5 0.5318 0.9467 0.8081 2.7145 0.7645 7.0395 1.8604 14.2216
6 0.5986 0.6877 0.8081 2.7145 0.7645 7.3959 1.504 14.2216
7 0.5986 0.6877 0.8081 2.7145 0.7645 7.7703 1.1296 14.2216
8 0.5986 0.6877 0.8081 2.7145 0.7645 8.1637 0.7362 14.2216
9 0.5986 0.6877 0.8081 2.7145 0.7645 8.5769 0.323 14.2216
10 0.6699 0.7782 0.8081 2.7145 0.7645 - - 5.9962
11 0.6699 0.7782 0.8081 2.7145 0.7645 - - 5.9962
12 0.6699 0.7782 0.8081 2.7145 0.7645 - - 5.9962
13 0.6699 0.7782 0.8081 2.7145 0.7645 - - 5.9962
14 0.6699 0.7782 0.8081 2.7145 0.7645 - - 5.9962
15 0.6699 0.7782 0.8081 2.7145 0.7645 - - 5.9962
16 0.6699 0.7782 0.8081 2.7145 0.7645 - - 5.9962
17 0.6699 0.7782 0.8081 2.7145 0.7645 - - 5.9962
18 0.6699 0.7782 0.8081 2.7145 0.7645 - - 5.9962
19 0.6699 0.7782 0.8081 2.7145 0.7645 - - 5.9962
20 0.6699 0.7782 0.8081 2.7145 0.7645 - - 5.9962
Levelized 0.5658 0.7148 0.8081 2.7145 0.7645 4.6533 1.3671 11.8490
Date Reason for tariff adjustment
02-05-2016 Quarterly Indexation
Three Gorges First Wind Farm Tariff revised by NEPRA
28-10-2016 Insurance
14-12-2016 Insurance
27-12-2016 Quarterly Indexation
20-01-2017 Quarterly Indexation
26-04-2017 Insurance
04-08-2017 Quarterly Indexation
03-10-2017 Quarterly Indexation
30-10-2017 Quarterly Indexation
29-01-2018 Quarterly Indexation
02-05-2018 Quarterly Indexation
24-07-2018 Quarterly Indexation
01-11-2018 Quarterly Indexation
16-11-2018 Insurance
31-01-2019 Quarterly Indexation
25-04-2019 Quarterly Indexation
20-08-2019 Quarterly Indexation
08-10-2019 Insurance
11-11-2019 Quarterly Indexation
11-02-2020 Quarterly Indexation
11-05-2020 Quarterly Indexation
07-08-2020 Quarterly Indexation
02-11-2020 Quarterly Indexation
Thank You!