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ISLAMABAD - Reduction in mark-up rate on the re-lending for the 969 MW Neelum Jhelum Hydroelectric Power (NJHP) project is likely to reduce its electricity cost to Rs9.15 per unit, it is learnt reliably here.
Last month, Water and Power Development Authority (Wapda) has requested the federal government to reduce the mark-up on foreign borrowing as it is being re-lending at much higher rates to the NJHP project. However, the Planning Commission has asked the government that instead of reducing mark-up rate on re-lending for one project, reduce it for all the electricity projects which will help reducing the cost of the electricity and the timely completion of the projects, official sources told The Nation.
The official said that the federal government borrows money from foreign creditors at a lower mark-up, but the Economic Affairs Division (EAD) is charging 15 percent on the re-lending of these loans to different government entities. On the other hand, as compare to the government entities and Wapda, the EAD charges the provinces in much lower rate. The Wapda has therefore requested the government to bring the mark-up rates to the level of provinces.
Currently, the federal government is re-lending foreign loans to Wapda for the NJHP project at a very high mark-up of 15 percent per annum. Out of the total cost of Rs500 billion of the Neelum Jhelum, around Rs90 billion is Interest During Construction (IDC), the official said. Reduction in high mark-up will considerably reduce the generation cost of the electricity, the official said.
The reduction in interest rate on the re-lending can considerably reduce the levelised tariff of the project to around Rs9.15 from the estimated Rs13.12 per unit. The levelised cost of electricity is the net present value of the unit-cost of electricity over the lifetime of a generating asset.
The Planning Commission is of the view that instead of making money on foreign loans, the EAD should charge the original interest rates from all the electricity projects to ensure affordable electricity, the official said.
The intake Neelum-Jhelum is at Nauseri 41km east of Muzaffarabad and has installed capacity of 969MW. The project was originally estimated to cost Rs130 billion in 2007, which went up to Rs275 billion in 2012, partly because of changes in specifications arising out of geographical changes following the devastating earthquake of 2005.
Soon after assuming the charge as prime minister in 2013, Nawaz Sharif issued directives for its completion by December 2015. But later due to funds shortage, the project was delayed which has resulted in further escalation of cost to Rs404 billion and later to Rs500 billion. The deadline for the completion was rescheduled twice first to the end of 2016, then mid 2017 and now it is expected to be partially operational by early 2018. The first, second and third units of Neelum-Jhelum project would start operations by February 28, 2018, March 15, 2018 and April 15, 2018, respectively.
However, when contacted an official of the Wapda said that they have yet to finalise the final tariff for the Neelum Jhelum project and it was too early to determine the per unit cost.
http://nation.com.pk/business/15-May-2017/njhp-electricity-cost-to-decrease-to-rs915-unit
Last month, Water and Power Development Authority (Wapda) has requested the federal government to reduce the mark-up on foreign borrowing as it is being re-lending at much higher rates to the NJHP project. However, the Planning Commission has asked the government that instead of reducing mark-up rate on re-lending for one project, reduce it for all the electricity projects which will help reducing the cost of the electricity and the timely completion of the projects, official sources told The Nation.
The official said that the federal government borrows money from foreign creditors at a lower mark-up, but the Economic Affairs Division (EAD) is charging 15 percent on the re-lending of these loans to different government entities. On the other hand, as compare to the government entities and Wapda, the EAD charges the provinces in much lower rate. The Wapda has therefore requested the government to bring the mark-up rates to the level of provinces.
Currently, the federal government is re-lending foreign loans to Wapda for the NJHP project at a very high mark-up of 15 percent per annum. Out of the total cost of Rs500 billion of the Neelum Jhelum, around Rs90 billion is Interest During Construction (IDC), the official said. Reduction in high mark-up will considerably reduce the generation cost of the electricity, the official said.
The reduction in interest rate on the re-lending can considerably reduce the levelised tariff of the project to around Rs9.15 from the estimated Rs13.12 per unit. The levelised cost of electricity is the net present value of the unit-cost of electricity over the lifetime of a generating asset.
The Planning Commission is of the view that instead of making money on foreign loans, the EAD should charge the original interest rates from all the electricity projects to ensure affordable electricity, the official said.
The intake Neelum-Jhelum is at Nauseri 41km east of Muzaffarabad and has installed capacity of 969MW. The project was originally estimated to cost Rs130 billion in 2007, which went up to Rs275 billion in 2012, partly because of changes in specifications arising out of geographical changes following the devastating earthquake of 2005.
Soon after assuming the charge as prime minister in 2013, Nawaz Sharif issued directives for its completion by December 2015. But later due to funds shortage, the project was delayed which has resulted in further escalation of cost to Rs404 billion and later to Rs500 billion. The deadline for the completion was rescheduled twice first to the end of 2016, then mid 2017 and now it is expected to be partially operational by early 2018. The first, second and third units of Neelum-Jhelum project would start operations by February 28, 2018, March 15, 2018 and April 15, 2018, respectively.
However, when contacted an official of the Wapda said that they have yet to finalise the final tariff for the Neelum Jhelum project and it was too early to determine the per unit cost.
http://nation.com.pk/business/15-May-2017/njhp-electricity-cost-to-decrease-to-rs915-unit
