New Hydel Profit Methodology to Raise Electricity Prices by Over 20%

The application of AGN Kazi Committee Methodology (KCM) for the calculation of Net Hydel Profit (NHP) will increase the generation cost of the hydroelectricity to Rs. 8 per unit.

Hydropower, solar, wind, and nuclear power generation are keeping the cost of the electricity low, but the adoption of the KCM formula for NHP calculation will increase the basket price of electricity by more than 20 percent, an official source told ProPakistani.

The Water & Power Development Authority (WAPDA) is currently paying Rs. 1.10 per unit to Khyber Pakhtunkhwa and Punjab as Net Hydel profit on annual indexation of five percent on the current rate of Rs. 1.10 per kWh from FY 2016. Similarly, Rs. 1.10 per unit is being paid to Azad Jammu and Kashmir as Water Use Charges (WUC).

The National Electric Power Regulatory Authority’s (NEPRA) approved bulk hydropower tariff for FY 2020-21 for WAPDA’s hydropower stations is Rs. 4.11 per unit for FY 2020-21. The application of the AGN KCM will increase the tariff for the WAPDA’s hydropower electricity by 100 percent, the source said.

Hydropower contribution typically varies between nine and 40 percent of the total national grid supply, depending on the availability of water in the reservoirs and rivers. Due to the better availability of water in the summer, the WAPDA hydel power generation is roaming around 9,000 MW, whereas in the winter, it can drop even below 1,500 MW.

There are massive variations in NHP estimates based on widely different interpretations of the KCM formula by stakeholders, the source said. The NHP for FY 2020-21 will be Rs. 38.75 billion at Rs. 1.15 per kWh while using the provincial version of the KCM, and the NHP figure works out to be more than Rs. 400 billion, the source added.

When asked about the application of the KCM formula to the newly-added Karot Hydropower project or prospective IPP-based hydro project, the source said it may be only applicable to the WAPDA’s hydropower projects, not IPP-based generation. Additionally, for private hydro IPPs, the rate for the use of water resources as per the Power Policy 2015 approved by the CCI is Rs. 0.425/unit.



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