ECCC approves “Induction of Security Cost for the CPEC Projects in the power tariff through NEPRA”

The Economic Coordination Committee of Cabinet approved the proposal titles “Induction of Security Cost for the CPEC projects in the power tariff through NEPRA to ensure the Security Sustainability”.

The summary of the of the approved proposal is as such, “CPEC Projects which have achieved Financial Close and for the CPEC early harvest projects where Financial Close is still pending as well as new addition to the CPEC Projects under Implementation Agreement, ECC of the Cabinet may approve and allow issuance of a policy directive to NEPRA to allow 1% of the Capital Cost net of aforementioned US$ 150,000/- amount on account of security to be distributed annually starting from the construction period till the term of the Power Purchase Agreement.”

The companies delivering energy projects under the early CPEC harvest were allowed to send their comments on the above proposal. Companies include; Zonergy, Hydro Dawood, UEP Wind, SK Hydro v. Syed Akhtar Ali and Anwar Kamal Law Associates.

After an indepth analysis of the situation the authority decided as such, “On the basis of the analysis of the issue in the preceding paragraphs, the Authority has decided to allow 1% capital cost of the project reduced by US$ 150,000/annum (subject to 3% indexation for each year after the 1st year from COD) as security cost in respect of each CPEC power project in accordance with the approved payment mechanism and the same shall be treated as pass-through item. The details of the 1% security cost for each project is provided at Annex-I.”

The complete text along with the Annexure-I can be accessed here.