The National Electric Power Regulatory Authority (NEPRA) has decided to discontinue the dollar-based indexations for four power plants, media learnt on Thursday.
The plants include Haveli Bahadur Shah, Balloki, Northern Power Generation Company Limited (NPGCL), and Central Power Generation Co. Ltd (CPGCL) power plants.
These prudent measures will result in a projected saving of Rs1.6 trillion over the life of the projects, including Rs22 billion in the current financial year alone
The decision was taken in a public hearing held on Thursday at the headquarters in Islamabad, NEPRA said in a press release.
“In a landmark move, NEPRA has decided to discontinue dollar-based indexations for these plants, transitioning instead to rupee-based indexations fixed for the entire useful life of the power projects.
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“This strategic revision aims to curb foreign exchange exposure and reduce tariff volatility for consumers,” the press release read.
“Further reforms include capping the indexation for Operations & Maintenance (O&M) costs to 70% of rupee devaluation, down from the previous 100%. Local O&M expenses will now be indexed to either 5% or the 12-month average of the National Consumer Price Index (NCPI), whichever is lower.”
NEPRA also announced to rationalise the return on equity (ROE) structure.
“Plants will now receive 35% of the ROE as fixed, with the remaining 65% linked directly to the actual operation of the plant — a significant departure from the previous 100% guaranteed ROE model.
“These prudent measures will result in a projected saving of Rs1.6 trillion over the life of the projects, including Rs22 billion in the current financial year alone,” it said.
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