Power Purchase Agreement
Section 25 of WAPDA Act provides that, the Authority shall ordinarily sell power in bulk. Further it is also stated that the rate at which the Authority shall sell power shall be so fixed as to provide for meeting the operation cost, interest charges and depreciation of assets, the redemption at due time of loans other than those covered by the depreciation, the payment of any taxes and a reasonable return on investment.
As per NEPRA Act, each licensee is required to get its power services tariff determined from NEPRA. The annual revenue requirement of WAPDA Hydroelectric comprising all cost components and return is determined by NEPRA, usually on annual basis, after the Authority files a petition for the revision in tariff to NEPRA. On the basis of annual revenue requirements, NEPRA determines Bulk supply tariff for WAPDA Hydroelectric in two components i.e Capacity charge (95%) and Energy charge (5%) for recovery of annual revenue requirements and recommends GoP to notify the same through a Gazette Notification. The Authority can only charge the tariff officially notified by GoP through gazette notification.
WAPDA Hydroelectric key source of revenue is proceeds from sale of electricity at a notified tariff to NTDC/CPPA. For this purpose WAPDA has entered into Power Purchase Agreement (“PPA”) with NTDC on 24th January 2011 for sale of electricity and timely power sales payments under PPA have been ensured through operating Escrow Account.
NEPRA determines the Bulk supply tariff for WAPDA Hydroelectric and GoP notifies it. Tariff once determined by NEPRA and notified by the GoP remains valid until the same is revised by NEPRA. WAPDA gets its tariff determined from NEPRA from time to time and the existing applicable tariff was determined by NEPRA in Feb 2014 for FY 2013-14.