Islamabad-CIHC Pak Power Company Limited (CPPCL), a Chinese company, has sought an increase of 25.38 percent in Engineering, Procurement and Construction (EPC) cost of 300MW Gwadar coal-fired power generation project to $403 million and 21.43 percent hike in return on equity (ROE).

In its petition for modification/revision in tariff for 300MW coal-fired project Gwadar, the company has sought 21.43 percent hike in return on equity and requested the regulator to allow upward adjustment of Internal Rate of Return (IRR) to 17 percent from the earlier determined 14 percent. As per the petition submitted to National Electric Power Regulatory Authority (NEPRA) the Chinese company has requested an increase of $82 million in EPC cost. CIHC Pak Power Company Limited (CPPCL) is setting up the 300MW coal-fired power plant in Gwadar, Balochistan.

The company had requested a hike in the EPC cost of the project from the earlier revised determined $321.41 million to $403 million. Originally, NEPRA had allowed EPC of $236.13 million for Gwadar coal project, which was later revised to $321.41 million. Now, the Chinese company once again wants to further upward revise it. The petition also requested the regulator to remove the provisions limiting the project cost indexation to a specific PKR rate i.e. 105/USD.  The CPPCL requested that Sinosure fee at actual under a Buyers Credit Insurance be allowed subject to maximum of 7 percent of debt servicing. The petition requested the authority to include the financial guarantee as part of the annual recurring costs at rate of 0.9 percent of the guaranteed amount applicable in a particular year. The Chinese company sought an increase in the project development and sponsor’s cost to $47.87 million against the allowed amount of $10.50 million. 

The petition requested that the API-4 may be kept as the base index for the determination of coal price as outlined in the authority’s fuel pricing mechanism dated 23rd September 2016. The petition also sought clarification on taxes and duties. The petition requested to allow increase O&M cost of $17.43 million against allowed amount of $12.71 million. The company has also requested for allowing Buyer’s Credit Policy for Sinosure fee. Earlier, in the revised determination, NEPRA had allowed Overseas Investment Insurance Policy. In its original petition, the petition requested $369.89 million on account of EPC comprising offshore portion of $250.16 million and onshore portion of $119.73 million. The EPC cost includes costs of procurement, engineering design, site preparation, construction of boundary wall, access road, bridge on river/creek, temporary facilities, main plant (including import, installation, erection, completion, commissioning of boiler, turbine and generator), balance of plant (electrical and mechanical equipment and systems), control and metering, civil works, coal handling system, ash handling system, on-site ash disposal system, seawater intake and outfall channels, black start generator, desalination plant, electrostatic precipitator, selective catalytic reduction (“SCR”) to capture NOx, colony, project management, erection and commissioning, security costs and security personnel accommodation. Originally, NEPRA had allowed the EPC cost of $236.13 million for 300MW coal-fired power plant in Gwadar. The regulator had allowed the Chinese company a tariff of Rs6.96 per unit for the project.