ISLAMABAD: Pakistan’s power regulator has approved a 25-year energy purchase agreement for a 15MW solar project in Thatta, rejecting dollar-denominated returns for shareholders and instead mandating rupee-based returns in a decision aimed at shielding consumers from foreign exchange volatility.
The National Electric Power Regulatory Authority’s ruling clears the way for K-Electric to buy power from Gharo Newgen (Private) Limited’s coastal solar facility, but imposes strict conditions including a six-month construction deadline and penalties for excess generation.
The project’s levelized tariff of 10.5897 rupees per kilowatt-hour (3.7746 US cents) falls within the range of recent competitive bidding results for larger projects, Nepra found.
But in a significant departure from past practice, the authority disallowed the developer’s request for 13 percent dollar-denominated returns, citing no foreign equity participation and the need to protect consumers from currency risk.
“Allowing USD-based returns transfers the entire foreign exchange risk to consumers and exposes tariffs to volatility, which is inconsistent with the objective of tariff stability,” Nepra said in its 32-page decision. “The evolving regulatory and macroeconomic environment warrants a more prudent approach.” The authority instead approved 17 percent returns in Pakistani rupees.
The project, developed by Gharo Newgen on 54 acres, will connect to KE’s Gharo grid station at 11kV. Nepra trimmed the proposed construction period from eight months to six, citing the sponsor’s experience and ready equipment availability.
Regulators also capped the project’s capacity factor at 23.3 percent, with generation above that threshold earning sharply reduced rates, as low as zero percent for the first increment above the cap. The decision marks one of the first major tests of negotiated power procurement under 2022 regulations that allow such deals when competitive bidding isn’t feasible. Nepra said the project was included in KE’s power acquisition plan for fast-track induction.
