Balochistan Power Generation Policy 2007

Government of Balochistan

Balochistan Power Generation Policy 2007

FOREWORD
The agriculture economy of the province of Balochistan is mostly dependent on under ground water resources and depends heavily on reliable availability of power. The assets demand at present is 900 MW whereas availability is only 560 MW with the shortfall of 340 MW excluding Southern Areas of Lasbela District and Makran which are supplied by Karachi Supply Company (KESC) and Government of Iran respectively. Existing plans for industrialization and village electrification will create a further expansion in demand for electricity and inspite of planed measures to enhance supply, shortfall to the extent of 400 MW is estimated to persist. The Provincial Government has been authorized under the Constitution of Pakistan and GoP’s Power Policy 2002 to undertake activities in the power sector. As such the GOB has setup the “Balochistan Power Development Board (BPDB)” for implementation of Power projects through one window operation. Government of Balochistan has identified natural resources available for development of Power Projects based on indigenous fuel such as coal, oil, gas, biomass, solar and wind energy. To exploit these potentials, The GOB has framed “Balochistan Power Generation Policy 2007” for implementation through Balochistan Power Development Board (BPDB). The fiscal and financial incentives / concessions outlined in the policy are in-line with GOP’s Policy for Development of Power Projects. There is a need to develop industrial and agricultural sectors to cause socio economic improvement of the people of the province. WAPDA though has plans to overcome the short fall of electricity but GOB recognizes to utilize natural coal resources to generate power. Therefore, several deposit sites including Degari, Surange, Mach, Duki and Chamalung have been identified which could be used as a resource for establishing power houses to generate electricity augmenting the already available power of WAPDA / QESCO. Towards this end GOB has therefore conceived plan to prepare a policy encouraging private entrepreneur to establish coal based power houses up to 50 MW at different locations of the province. The GOB invites investors to participate and invest in power development activities in the power sector by setting up of Power Generation Project on natural / alternative energy resources. The GOB assures all investors that it shall gives such projects the maximum possible support. I record my appreciation for the efforts of Mr. Muhammad Ashraf Aziz, Electric Inspector cum Director, Agha Hassan Raza Assistant Electric Inspector and Mr. Shahzad Anjum Computer Operator who helped preparation of policy documents.

ABDUS SALAM KHAN Secretary Irrigation & Power Department Government of Balochistan

Balochistan Power Generation Policy 2007

Balochistan Power Generation Policy 2007 ABBREVIATIONS BOO BOOT CB CBR COD CPP CSA DISCO EIRR EOI EPP FBS FIRR FSA GOP GOB GSA IA ICB IPP KESC KV KW KWh LOI LOS MW NBP NEPRA NTDC PEPA POE Policy B’tan-EPA PPA BPDB Build-Own-Operate (Appendix – 1) Build-Own-Operate-Transfer (Appendix – 1) Competitive Bidding Central Board of Revenue Commercial Operation Date Capacity Purchase Price Coal Supply Agreement Power Distribution Company Economic Internal Rate of Return Expression Of Interest Energy Purchase Price Federal Bureau of Statistics Financial Internal Rate of Return Fuel Supply Agreement Government of Pakistan Government of Balochistan Gas Supply Agreement Implementation Agreement International Competitive Bidding Independent Power Producer Karachi Electric Supply Corporation Kilo Volt Kilo Watt Kilo Watt Hour Letter of Interest Letter of Support Mega Watt National Bank of Pakistan National Electric Power Regulatory Authority National Transmission and Despatch Company Pakistan Environmental Protection Agency Panel of Experts Balochistan Power Generation Policy 2007 Balochistan Environment Protection Agency Power Purchase Agreement Balochistan Power Development Board .

Balochistan Power Generation Policy 2007 PAEC PPIB PPC PQD QESCO RFP Rs SECP SPP SRO TFC US$ WAPDA WPI WUA WUL Pakistan Atomic Energy Commission Private Power and Infrastructure Board Private Power Cell Prequalification Documents Quetta Electric Supply Company Request for Proposals Pakistan Rupee Securities and Exchange Commission of Pakistan Small Power Producer Statutory Rules and Orders Term Finance Certificate United States Dollar Water and Power Development Authority Wholesale Price Index Water Use Agreement Water Use License .

.................................................................................16 Sale to Industrial Estate as Bulk Consumer ..................3 1.......2 1....3 4...13 Participation in Bidding .........................................16 6...........................7 3...........17 ....... 3 Power Regulatory Environment ...........1....................................2 5...............1 6.........................1 1.................................... 15 5..................................4 4.............................12 Letter of Interest (LOI) .........................................................................................................................2 Sale to Distribution Company (DISCO) .3 Fee Structure ....................................................................Balochistan Power Generation Policy 2007 TABLE OF CONTENTS 1......4 3....................................................................2 1................................................................................................. 7 2...................1 4....... THE IMPLEMENTATION PROCESS ......................................................13 5......1 Structure of the Power Sector ......................................................................... 3 Requirement of Future Generation Capacity ........................15 Project Implementation .......................................................9 Request for Proposals (RFP) ...1 Balochistan Power Development Board (BPDB) ....................1...1 3............................5 2....1 1.......................................................5 Submission of Proposals ............ 12 4... SALE OF POWER ..........................................13 Schedule ............................................ PROPOSALS ON RAW SITES ..............12 Negotiations on Tariff/ Power Purchase Agreement .2 4.8 Pre-Qualification ..... 1 1............5 Power Structure in Balochistan Province . INSTITUTIONAL ARRANGEMENTS .........................11 4....................... INTRODUCTION ......................................................................................15 Bid Bond.... 16 6..............................4 1...............2 3...........................3 3.............................................................5 Schedule .............................................................5 Features of the Power Generation Policy............................ Letter of Support and Performance Guarantee ........................... SOLICITED PROPOSALS ..9 Lock-in-Period ......................................1 5.5 Scope of the Power Generation Policy ...........................5 Objectives of the Power Generation Policy ............................................9 Evaluation of Bids.......................... 8 3.....................................................................................................

...............................2.............................2 8....... 18 Capacity and Energy Components ...............................................................2 8... 19 THE ENVIRONMENT ....................................................................................17 Alternate-I : Lease of GOB’s Land ............................................ 18 Exchange Rate Variations ...................1 8.......................................................................... Financial and Fiscal Regime ....20 Feasibility Studies ... 22 Appendix – 2 ..... 17 8.....3 7........................................................................................................................................ TARIFFS...................................................................................2....................... PUBLIC .............................................................................4 8...........................................20 13........................................................1 7................ 17 7........................................3 Currency of Tariff .....................................................................17 Use of Land Owned by Government of Balochistan .................2....Balochistan Power Generation Policy 2007 6.................................................19 9.. 11...... Sale Exclusive for an Industry or for any other Special Purpose ........................................................................ 19 Escalation ....1 12............ 19 SECURITY PACKAGE ...................17 Tariff Structure.................................18 8........................................... 20 12.............................................................. 20 SPECIFIC PROVISIONS .......17 Alternate-II : Equity Participation .................................................................... 22 ............................ 10....................................2 Dispatch ........3 8................ 21 Appendix – 1 .......................................PRIVATE PARTNERSHIP .....................2 Point of Delivery ....................... 12..............1 8............................... 19 Yearly Profile of Tariff ...2.....................

BPDB has been given the mandate to implement power generation projects in the private sector through the utilization of coal resources. In Pakistan. In liaison with WAPDA. NTDC. water resources of canals and other resources based on indigenous fuel like oil. and which is in the process of being privatized in accordance with the policy of the Government of Pakistan. The increased availability of electric power to the people of Balochistan. This Policy has therefore been framed by the Government of Balochistan to attract investors to develop and implement power generation projects up to maximum capacity of 50 MW. INTRODUCTION 1. the following power utilities in the public and private sectors are providing the necessary services to the population. Karachi Electric Supply Corporation (KESC). wherever economically available. gas. The Government of Balochistan approved the establishment of Balochistan Power Development Board (BPDB) in 2007. which has been unbundled into Power Distribution Companies (DISCOs).Balochistan Power Generation Policy 2007 1. Ltd (NTDC) and Generation Companies (GENCOs). shall generate industrial and agricultural growth. DISCOs. and also lead to improvement in blackout problems in urbanized areas. To achieve its adjective the BPDB shall provide support and facilitation to private sector investors for implementation of power generation projects. National Transmission and Dispatch Co. 2. 3.1 Structure of the Power Sector 4. The 2002 Power Generation Policy of the Government of Pakistan allows the provinces to develop power generation projects of upto 50MW in public and/or private sectors to utilize the available natural resources for power generation and to avoid capacity shortfall. as well as wind and solar energy.  Pakistan Water and Power Development Authority (WAPDA). which has now been privatized and supplies electricity to Karachi City the Lasbela District of Balochistan.  1 . uplift the economy and society. NEPRA and other agencies. 1. coal.

756 MW by KESC. which is primarily to allow WAPDA to meet the deficit of power supply in the Karachi area. 5.Balochistan Power Generation Policy 2007   Pakistan Atomic Energy Commission (PAEC) a Government owned entity Independent Power Producers (IPPs) in the private sector who sell electricity to WAPDA. for which KESC is the main source of supply.975 MW in the country.000MW by IPPs. Available supply from the National Power Grid is 560 MW as such a shot fall of 340 MW exists which results in extensive load shedding especially during peak seasons presently Balochistan receives its electricity requirements from the National/ Regional Grids as follows. Out of the total generation capacity of about 17. a) Habibullah Coastal b) Gudu From Shikarpur c) From Kot Addu Sakhi Sarwar d) Uch IPP e) GTPS Panjgoor f) Supply from Iran g) Sheikh Manda (Stand by) h) Pasni To cater for shortfalls the following project will be implemented over the period 20072010 a) Dadu – Khuzdar 220 Kv Transmission Line. The transmission system of WAPDA and KESC is interconnected through 220kV double circuit transmission line. WAPDA supplies power to all of Pakistan except the metropolitan city of Karachi and Lasbela district Balochistan. 9.750 MW is owned by WAPDA hydel and GENCOs. 460 MW by PAEC and 6. 2 . 1. A new 500 / 220 KV interconnection with KESC for supply from the IPP-HUBCO (Balochistan) 500KV line is also expected to be completed by the year 2007. However the projected growth of demand is expected to raised to 1323 MW by 2010 therefore a short fall of 763 MW is foreseen to persist. b) Dera Ghazi Khan – Loralai 220 kv Transmission line c) Construction of Second 132 kv Sakhi Sarwar–Loralai Transmission line. Present estimated electricity energy demand for Balochistan is 900 MW.

Balochistan Power Generation Policy 2007 1. To protect the rights of consumers as well as the producers and sellers of electricity.1 Power Structure in Balochistan Province 6. 11. However. The NEPRA Act extends to the whole of Pakistan. Under the NEPRA Act. The IPPs situated in Balochistan such as HUBCO. PAEC and IPPS out of the pooled NTDC grid network. NTDC receives power from all the hydel/thermal power generating stations and supplies power to all the DISCOs. The other power supply sources in the province is the purchase of 35 MW electricity from Iran for southern districts of Kech. The National Transmission and Despatch Company (NTDC) is a newly created company which has been carved out of what used to be the Power Wing of Wapda. QESCO in case of Balochistan). NEPRA jurisdiction does not apply in cases where small IPPs (below 50 MW) intend to sell Power to DISCOs (i. Transmission and Distribution of Electric Power Act (XL of 1997) (NEPRA Act). 1.1. NEPRA is exclusively responsible for the following: 3 . thermal power stations from GENCOs. Powers and functions of NEPRA i.e. . Gwadar. also 15 small diesel power houses are supplying partial hours electricity to some remote town not connected to the National Grid.2 Power Regulatory Environment NEPRA For Protection of Interests of the Consumers and Power Companies 10. the National Electric Power Regulatory Authority (NEPRA) has been established with various powers and functions. 9. the Government of Pakistan has enacted the Regulation of Generation. NTDC is responsible for maintenance and operation of a high tension network of 500 KV & 220 KV grid stations and transmission lines and the 132KV inter-connections. This power is received from WAPDA hydel stations. Power is supplied by the National Transmission and Despatch Company (NTDC) to QESCO through 220& 132 kV transmission lines under specific tariffs which are regulated by NEPRA.1. Panjgoor. The objective of the current power regulatory environment is to promote fair competition in the electricity industry. Uch Power and Habibullah Coastal Power Supply power to NTDC grid network from their power stations based on natural gas as fuel. 8. The power requirements of the Province will be supplemented through the indigenous cual fuel and other renewable resources & thermal generation which is to be developed under this Policy. The power structure in Balochistan which belonged previously to the Power Wing of WAPDA is now managed by power distribution company namely QESCO. NEPRA jurisdiction extents only to IPP projects above 50 MW or in case where small IPPs intent to sell their power to WAPDA. 7.

The NEPRA Act explicitly provides that notwithstanding anything contained in the Act. Granting licenses for generation. laid down by the Federal Government. and Performing any other function which is incidental or consequential to any of the aforesaid functions. the Government of a Province may construct power houses and grid stations and lay transmission lines for use within the Province and determine the tariff for distribution of electricity within the Province. as far as practicable. to protect the interests of consumers and companies providing electric power services in accordance with guidelines. transmission and distribution companies. iii. Reviewing the organizational structures of generation. Prescribing fines for contravention of the provision of this Act. In performing its functions under this Act. Prescribing fees including fees for grant of licenses and renewal thereof. transmission and distribution companies and recommending to the Federal Government for notification. NEPRA is required to consider the recommendations of the Government of the Province in which such generation facility is located. NEPRA is required. Prescribing procedures and standards for investment programs by generation. Encouraging uniform industry standards and code of conduct for generation. rates. iv. transmission and distribution companies. transmission and distribution companies. 4 . Establishing a uniform system of accounts for generation. transmission and distribution companies. charges and other terms and conditions for supply of electric power services by the generation. Performing any other function which is incidental or consequential to any of the aforesaid functions. transmission and distribution of electric power.Balochistan Power Generation Policy 2007          Regulating the provision of electric power services. transmission and distribution companies. Giving advice to public sector projects. Submitting reports to the Federal Government with respect to the activities of generation. Determining tariff. Prescribing and enforcing performance standards for generation.      ii. Before approving the tariff for the supply of electric power by generation companies using hydro-electric plants. transmission and distribution companies to avoid any adverse effect on the operation of electric power services and for continuous and efficient supply of such services. not inconsistent with the provisions of the NEPRA Act.

The Power Generation Policy covers the development and implementation of power generation projects in the Small Power Producers (SPPs) category in:    the private sector. therefore. Private. As such. It is. the intention of the Government of Balochistan:i. 15. 1. To solicit bids for Power Generation projects.  Two part tariff comprising of CPP and EPP. oil. the public sector. upto 50 MW capacity from Private Sector investors on sites where fuel sources are available such as coal. (e) To protect the environment. additional power generation is necessary to meet load growth requirements from year 2008 onwards. Utilization of wind and solar energy for power generation shall be encouraged. Objectives of the Power Generation Policy The main objectives of this Policy are:- (a) To provide adequate power generation capacity at the least cost. “stranded” Isolated gas wells etc. (c) To promote indigenization. the implementation of new Power Generation projects will be processed as solicited proposals. ii. 13. In view of the long lead-time required to bring new thermal and alternative power plants in the power system. Presently. Where no feasibility studies have been conducted or initiated. the work on the new power Generation projects has to be started hence forthwith.  Thrust on development of Power projects based in indigenous resources and fuels especially coal and renewable.e.5 Features of the Power Generation Policy 16.3 14. the combined generation capacity available in both the public and private sector is insufficient to meet the power demand up to the year 2007.  Tariff for solicited bids) through international competitive bidding.4 Scope of the Power Generation Policy Policy Features  Concessions of Policy available to all sectors i.Balochistan Power Generation Policy 2007 1. 1. Public private and Public Sector.2 Requirement of Future Generation Capacity 12. and through public-private partnerships 1. gas. Where feasibility studies have already been conducted. To initiate feasibility study work on raw sites for exploiting available hydel. coal. (d) To encourage the local engineering industry to form joint ventures with foreign companies for participation in the development of the Power Generation projects. projects will be offered as raw site proposals or as 5 . (b) To encourage and ensure exploitation of indigenous fuel (oil/gas/coal/biomass) resources for development of thermal Power Generation projects in Balochistan. solar and wind potential.

a detailed economic and financial assessment of the proposed project which takes into consideration all benefit and cost streams associated with the project. the financial evaluation shall be carried out from the project sponsor’s point of view. (b) Raw site proposals shall be offered to pre-qualified sponsors. Key determining factors for a project’s viability. The decision in this regard will be made on a case-to-case basis. The process of selection will require prequalification. Projects established on a BOOT basis shall be transferred to the Government of Balochistan for a notional value of Rs. While the economic analysis may be conducted from the perspective of the net benefits to the national economy.Balochistan Power Generation Policy 2007 un solicited proposals whereas sponsor directly submits a feasibility proposal on a site not listed with the BPDB. The proposals will be evaluated by BPDB and an LOI will be issued to the qualifying sponsor after submission of the bank guarantee of the specified amount in favor of BPDB. a raw site project’s EIRR and FIRR shall at least be equal to 10% in real terms. each sponsor will submit feasibility study and tariff rates bid for the project on the specified date to BPDB. With the purpose of conducting technical audit of the project sponsors’ calculation. The sponsor will submit a feasibility study and tariff rate proposal to BPDB which will be evaluated by BPDB / POE and LOI will be issued if found feasible. Variable tariff over the life of the project will be permitted under the terms specified in the Request for Proposal (RFP). The feasibility studies shall contain. The successful sponsor will be selected after the approval of the feasibility study by the BPDB on the recommendation of Panel of Experts (POE) notified by BPDB and negotiation of the tariff thereafter. inter alia. 1 at the end of a concession period allowed by BPDB from the Commercial Operation Date (COD). Thermal Power projects in the private sector may be established on either a BuildOwn-Operate-Transfer (BOOT) basis or on a Build-Own-Operate (BOO) basis. 18. Competitive or negotiated tariffs will comprise of an Energy Purchase Price (EPP) and a Capacity Purchase Price (CPP) with adequate provision for escalation. In order to qualify for consideration by the BPDB. If there is more than one sponsor for a raw site proposal. 17. (c) Unsolicited proposals on raw sites not on the list of project with BPDB will be entertained on a first come–first served basis. Sponsor must full fill the minimum requirements for pre-qualifiction. it shall be mandatory for the project sponsors to provide soft copies of their techno-economic and techno-financial computer models to BPDB along with the hard and soft copies of the feasibility studies. EIRR and FIRR. would be Economic and Financial Internal Rates of Return i. The sponsor shall conduct the feasibility study at his own cost and submit it to Balochistan Power Development Board (BPDB) for approval. bidding and evaluation in accordance with the bidding criteria clearly laid down in the RFP. 19. (a) Solicited proposals will be processed for selection of the successful bidders on the basis of minimum levelized tariff through competitive bidding. from both the perspectives.e. issuance of RFP. CPP for thermal 6 .

Government of Balochistan consists of (2) Secretary Finance.e. 22. Planning and Development Department. the FSA/ GSA/CSA. 20. 21. 24. To promote indigenization. (4) Secretary Mines and Minerals. Negotiate the implementation agreements (IAs).1 INSTITUTIONAL ARRANGEMENTS Balochistan Power Development Board (BPDB) 23. (3) Secretary Law. BPDB will provide one-window support to IPPs/SPPs and assist in ensuring that the concerned agencies make timely decisions with respect to related matters. 2. in case of power sale to a DISCO i. BPDB may assist the sponsors in finalization of the security agreements as may be required under the policy. coal. 2. All other concessions and tax exemption as available under Federal and Provincial Government Policies will also be available. (5) Secretary Environment and (6) Secretary irrigation and Power as convener. Services of auditor can be hired to evaluate financial aspects. GSP and SMEDA. Assist the sponsor / project company in seeking necessary consents / permissions from various governmental agencies.e. Evaluate the bids of pre-qualified sponsors and issue Letters of Interest and Letters of Support to the successful sponsors and eventually issue License for Power Generation. Pre-qualify the sponsors both in case of raw site projects or solicited site projects. gas. fuel supplier and provincial DISCOs and other authorities in the negotiations. The BPDB will:a) Facilitate the implementation of power generation projects and power distribution arrangements. QESCO in case of Balochistan. oil. wind or any other indigenous fuel. Board will also include members from QESCO. solar. assist in the negotiations relating to obtained generation license from NEPRA where required and assist the power producer. Balochistan Power Development Board (BPDB) setup in 2007 by the Government of Balochistan under the chairmanship of the (1) Additional Chief Secretary (Development). the local engineering industry shall be encouraged to form joint ventures with foreign companies for participation in the development of the generation projects.Balochistan Power Generation Policy 2007 projects will be different for different type of fuel i. execution and administration of other agreements such as the PPA. Power generation companies will be allowed to import plant and equipment at concessionary rates made available under any federal law and applicable to the projects to be developed under the Policy. b) c) d) e) 7 .

3.) per MW in favour of BPDB after approval of tariff Typical Time Allowed (days) 40 (b) (c) (d) (e) (f) (g) (h) (i) 40 60 30 60 60 60 30 15 Issuance of LOS by BPDB 8 . is presented as follows:Sr. Rs. 26.1 SOLICITED PROPOSALS Schedule 25.Balochistan Power Generation Policy 2007 f) g) h) Co-ordinate with Federal Government agencies and DISCOs / NTDC for development of the power generation projects. The feasibility reports shall need to be obtained from the BPDB (on payment of such fees or amounts as may be specified by BPDB). 3. Planning and Development Department. BPDB Established in 2007 Provides one window facility to the investors Board chaired by ACS Development. and. Take up such other matters as may be required for the promotion of power generation projects in the province. A typical schedule to conduct competitive bidding for a private Power Generation project with capacity up to 50 MW. Follow up and assist in the implementation and monitoring of projects. # (a) Activity Pre-qualification for specific projects. Government of Balochistan.BPDB will invite Sponsors for registration and for collection of pre-qualification documents through the press and all other channels normally prescribed by the Asian Development Bank and the World Bank Submission of pre-qualification documents to BPDB Evaluation of pre-qualification documents and notification to prequalified bidders by BPDB BPDB's invitation for bids to pre-qualified bidders and collection of bidding documents and feasibility study by pre-qualified bidders Time allowed for submission of bids to BPDB together with bid bond and evaluation fee in favour of BPDB Evaluation of bids and issuance of LOI against Bank Guarantee of US$ 1000 per MW to the successful bidders by BPDB Negotiation of Power Purchase Agreement Submission of Performance Guarantee by Sponsors @US$3000 (or equivalent Pak.

or as deemed appropriate. for each project offered for Competitive Bidding (CB) / International Competitive Bidding (ICB):(a) (b) (c) (d) Type of Project Net capacity (MW) Reference annual plant factor (%) Transmission arrangements including the point of delivery to the Power Purchaser Terms of Power Purchase Agreement Specific allowances for scheduled maintenance and excused forced outages Cooperation arrangements/agreement with local engineering companies.Balochistan Power Generation Policy 2007 A specific schedule will be circulated as part of the RFP for each project. b) 3. The pre-qualified sponsors must together hold 51% of the equity for the same period. Demonstrated capability for financing (equity and debt) or arranging finance. The lead member in case of consortium designated as the ‘Main Sponsor’. having a lead role and possessing sufficient financial strength.2 Pre-Qualification 27. for projects of similar size. The RFP for Power Generation Projects with capacity up to 50 MW is likely to specify the following. Bids will only be considered from bidders who comply with at least the following conditions for pre-qualification:a) Single sponsor or joint sponsors in case of a consortium will have at least a 51% stake in the equity and will have direct and relevant experience of. will be required to hold at least 20% of the equity of the project company during the "lock-in period" which will be from the LOS issuance date until the sixth anniversary of the successful commissioning of the plant. The Sponsor identified as the "Main Sponsor" in the application for pre-qualification. 3. 3. if any Evaluation criteria (e) (f) (g) (h) 9 . will hold at least a 20% stake in the equity of the project.3 Lock-in-Period 28. and capability in. the successful development or implementation or ownership or operation of projects of similar magnitude.4 Request for Proposals (RFP) 29.

IA.e. Concession Period to be specified by Sponsor      30. pre-bid conferences will be held to facilitate exchange of information with bidders in a transparent manner. rules. PPA / FSA / GSA / CSA (as applicable) etc. 10 . The following documents will also be included in the RFP:(a) (b) (c) (d) (e) (f) Instructions to bidders General provisions for bidders Minimum technical standards Standardized forms for NEPRA's tariff determination. If necessary. procedures and guidelines of the Pakistan Environmental Protection Agency (PEPA) and Balochistan Environmental Protection Agency (Balochistan-EPA) (g) 31.Balochistan Power Generation Policy 2007 (i) Tariff. Matching of debt-related capacity charge stream with loan repayment stream Sum of energy charge and non-debt-related capacity charge to be 'constant' or 'increasing' during the term Water use charge (in case of hydel projects). unless specified otherwise Fuel price and indexation mechanism. giving equal and adequate opportunity to all prospective bidders. if required. if available Feasibility study of the project Copies of relevant standard security package agreements and documents i. The level and mode of bidding (whether ICB or CB) shall be determined by BPDB on case to case basis. which would be 30 days prior to the bid submission deadline. Environmental laws. including:    Limitations on Front-end loading Limitations on proportion of capacity charge to overall tariff Reference date (s) for indexation. LOS.

the debt-related costs of all bidders shall be brought to an even keel through calculation of the IRRs of each project including the withholding tax and any other financing charges associated with each type of loan. In case of noncompliance or failure in the negotiation. In case of more than one bidder for a particular site. and if the doubled performance guarantee is provided at such point prior to the expiration of the original LOS as may be stipulated by the BPDB.Balochistan Power Generation Policy 2007 3. The bid with the lowest evaluated levelized tariff will be ranked as Number 1. the project shall be included in the CB / ICB category project. the successful bidder will be issued an LOS by BPDB against the delivery of a Performance Guarantee in favor of BPDB in the required amount (which performance guarantee shall be valid up to three months beyond the date of financial close date specified in the LOS). if the BPDB is satisfied that delays in achieving financial close are due to factors beyond the reasonable control of the Sponsors and that financial close can be achieved shortly. The extension in financial close will only be permitted if the validity period of the Performance Guarantee is extended for another nine (9) months (i. However. a one-time extension of up to a maximum period of six months will be given on formal approval of BPDB. 34. 33. Once the bid along with the tariff is finally accepted by BPDB.e. and upon the payment of the cost of the feasibility study to BPDB. BPDB will reserve the right to reject any or all bids without assigning any reason thereof. that LOS will become null and void while the project concession will be awarded to the best bidder. Under normal circumstances. In such case. 11 . 35. if the LOS holder desires to participate in the bidding. the existing LOS holder‘s bid does not fulfill the above criteria. three months beyond the expiry date of the extended LOS). on the basis as specified in the RFP at an annual reference plant factor and within the prescribed levels of front-end loading. Detailed evaluation criteria will be given in the RFP. A party or a group which is already in possession of a valid LOS issued by the BPDB shall submit the proposed tariff within 30 days to BPDB for negotiation. he shall be allowed to do so on revalidation of his originally submitted bank guarantee for that project. and will not assume any liabilities or claims of compensation in connection therewith.5 Evaluation of Bids 32. Evaluation of Power Generation projects will be on the basis of levelized tariff calculated at 10% discount rate over the term of the project. Bids will be opened on the prescribed date in the presence of bidders' representatives who choose to attend the bid opening. if the amount of the performance guarantee is increased by 100%. In case. no extension in achieving the financial closing will be granted except on the Sponsors' written request. 36.

must submit detailed proposals to BPDB.1 PROPOSALS ON RAW SITES Submission of Proposals Raw Sites 37. 4. which include at least the following information:(a) (b) (c) (d) (e) Project name/identification Project location Proposed capacity and plant factor Basic outline of structures and plant Summary programme indicating specific milestones and completion date of the detailed feasibility study Pre-qualification details as required under Section 4. with or without a foreign investor – wishing to undertake projects upto 50 MW at the raw sites. LOI when issued will require sponsors to carry out a complete feasibility study to be evaluated by Panel of Experts appointed by BPDB.Balochistan Power Generation Policy 2007 4. will be processed for issuance of an LOI by BPDB. The BPDP will invite EOIs from sponsors or alternatively sponsors may directly submits un-solicited proposals for sites for which feasibility studies are not available and which could be developed for power generation. The bidder whose proposal is approved by the BPDB or in case of more than one sponsor for a project. etc.2 Letter of Interest (LOI) 40. BPDB will invite the highest ranked pre-qualified sponsor for issuance of LOI and to carryout the proposed detailed feasibility study. Proposals on raw sites will be examined by the POE/ BPDB.7 Para 17. more than one candidate are interested to carry out feasibility studies on any one raw site. (f) (g) (h) (i) 39. In case. Sponsors – whether single companies or consortiums. LOI will issued to sponsors against a Bank Guarantee at the rate of US$200 per MW in favor of BPDB 12 .2 for the proposed Sponsors Proposed tariff rates and financial proposal Previous history of the project / proposal. 38. the one st that acquires the 1 ranked position in terms of Section 1. 4.

However. or the 90 days negotiation period lapses.Balochistan Power Generation Policy 2007 No extension in the validity period of an LOI shall be granted unless the Sponsor(s) submit a bank guarantee in favour of BPDB for double the original amount of the bank guarantee. 4. however. In case negotiations on tariff between the power purchaser and sponsors of the feasibility study are not successful. If the feasibility study is approved. 4. which guarantee must be valid for a minimum period of 180 days more than the validity period (as extended) of the LOI.) per MW in favour of BPDB. 42. Specimen of Power Purchase Agreement is at Appendix-2. the project will be processed as a solicited proposal in accordance with Section 3 here above. the feasibility study will be reviewed by the BPDB POE. The levelized tariff for the purpose shall be calculated at 12 % discount rate over the term of the project as per Para 34 here above. sponsors will file their application for tariff approval to NEPRA. Letter to this effect will be issued by BPDB. and the successful bidder will reimburse the reasonable and independently audited cost of the feasibility study to the initial sponsors before obtaining the LOS. private bulk power purchaser. BPDB will terminate the LOI and encash the bank guarantee. BPDB will issue the Letter of Support (LOS) against delivery of the performance guarantee of the value of US Dollars 1000 (or equivalent Pak Rs. valid up to three months beyond the date of financial close specified in the LOS (or as extended). The proposals received for projects up to 50 MW capacity in the manner stated above. BPDB will be notified by the power producer in case of successful tariff negotiation between the power purchaser and the sponsors. the Sponsors will be allowed to negotiate tariff with the DISCO or WAPDA has the case may. shall generally follow the schedule given below:- 13 . will be given a chance to undertake the project at the lowest tariff offered during the bidding process. On completion. 4. will be allowed to participate in the bid without submission of a bid bond and. for sale to WAPDA.3 Negotiations on Tariff/ Power Purchase Agreement 43. except that the sponsors who have conducted the feasibility study on the raw site. 41. If the POE confirms that the Sponsors have failed to meet the relevant milestones/standards. or through advertisement of raw sites by the BPDB. The doubled bank guarantee must also be provided at such point prior to the expiration of the original LOI as may be stipulated by the committee. The sponsor will file the application with BPDB for tariff approval in case of power sale to any DISCO i. BPDB will appoint an independent auditor.e.4 Participation in Bidding 44. On their refusal. After approval by NEPRA. The Sponsors will have to meet the standards and milestones stipulated in the LOI. The Sponsors will have no claim for compensation against the Government of Balochistan in such case. The LOI will require the Sponsors to carry out a complete feasibility study to be monitored by the POE.5 Schedule 45.

Typical Time Allowed (days) 60 (not required in case of unsolicited proposals) (b) 60 (c) Submission of bank guarantee by Sponsors @ US$ 1. (i) Submission of Performance Guarantee @ US$3000 / MW or equivalent Pak. by Sponsors in favour of BPDB. in favour of BPDB Issuance of the LOI by BPDB 15 (d) 15 (e) Initial time allowed to carry-out feasibility study/Term of the LOI (can be less if sponsors already possess feasibility) Interim tariff negotiations between Sponsors and power purchaser (QESCO or WAPDA or Private Industry ) NEPRA's approval of tariff (If required in case of sale to WAPDA) 12 months.e. No.Balochistan Power Generation Policy 2007 Sr. QESCO) 15 (h) Submission to BPDB of approved tariff. One time extension of 6 months will be allowed subject to submission of double the bank guarantee of the original amount 90 (f) (g) 120 (not required if power purchaser is local DISCO i. Rs. after approval of tariff Issuance of the LOS by BPDB 30 (j) 15 14 .000 per MW or equivalent in Pak Rs. (a) Activity Submission of proposal on raw site by the Sponsors in response to tender alongwith Bid Bond @ US$200 per MW Review of proposal on raw site by the POE appointed by BPDB.

Rs. 5.) per MW will be submitted by each bidder at the time of submission of bids.) to BPDB. Rs. Letter of Support and Performance Guarantee 47.2 Bid Bond.) per MW in favor of the BPDB valid initially for a period of three months in excess of validity of the LOS. A bid bond of US$ 200 (or equivalent Pak. the bid bond will be returned. will be suggested in the RFP * or the equivalent in Pak Rs. Fee US$ * 100 500 The RFP by pre-qualified bidders shall also include the feasibility study and relevant standard IA. 48. The Bank Guarantee will secure the successful bidder's obligation to execute the IA. PPA. a) Registration b) Purchase of Pre--qualification documents c) Bidding i) Purchase of RFP documents ii) Evaluation Up to 5 MW More than 5 up-to 20 MW More than 20 up-to 50 MW (d) Legal fees Remarks BPDB will provide policy brochures upon registration 1.000 2. however. by which date the sponsors/project company must achieve Financial Close for the project (as defined in the LOS). / WUA agreements etc.000 per MW. 5. Sr. and the successful bidder will be required to post a Bank Guarantee of US$ 1000 (or equivalent Pak. Suitable cap to this expense. the bid bonds of all bidders other than the Sponsors of the successful bid will be returned.000 3. Rs. The LOS against a performance guarantee a US$3. will normally be issued to the successful bidder for a period of 10-12 months (to be specified in the RFP).000 To be paid by Sponsors — for negotiations or review of other legal matters on the basis of actual expenses plus 20% as ancillary charges. All fees are subject to revision from time to time.000 5. Fees are to be paid by sponsors/project companies in US Dollars (or equivalent Pak.Balochistan Power Generation Policy 2007 5. PPA and other relevant agreements and achieve Financial Closing within the specified time period. The Performance Guarantee shall be in the form of an irrevocable direct- 15 . No. After submission of the Bank Guarantee by the successful bidder.1 THE IMPLEMENTATION PROCESS Fee Structure 46. After selection of the successful bidder.

The termination option may be exercised by foregoing a portion of the Performance Guarantee equal to the face value of the Performance Guarantee multiplied by the number of months since the issuance of the LOS (rounded up to the next whole number) divided by the total number of months allowed in the LOS to achieve Financial Close. Neither the Sponsors nor the project company shall have any claims against the Government of Balochistan or any of its components/organizations/ institutions on any ground(s) whatsoever. The Sponsors will have an option to terminate the LOS and any of the project agreements executed at any time before the required date for Financial Close as per terms and conditions of LOS.Balochistan Power Generation Policy 2007 pay letter of credit issued by a bank acceptable to the Government of Balochistan in favor of BPDB. The power generated will be delivered to the nearest grid station of DISCO when feasible in accordance with PPA between sponsor and concerned DISCO. 6. The transmission line from the company’s outgoing gantry and the interconnection will be constructed by the concerned DISCO. delays in achieving the Commercial Operation Date (as defined in the PPA) of the power complex. 49. 5. The Performance Guarantee must always remain valid for a period not less than three months in excess of the then-prevailing Financial Close deadline. will automatically terminate. as per a format specified by BPDB. The successful bidder will be required to submit to BPDB. Until financial close is reached. will incur liquidated damages as specified in the PPA. a mutually acceptable implementation schedule with specific milestones for monitoring progress. 16 . 6. the IA. thereafter the security agreements will supersede the LOS. SALE OF POWER 52. If the LOS expires on account of failure to achieve financial close. Equitable compensation against parties concerned may be specified in the IA / PPA for not meeting specified milestones under the security agreements. 50. Delays in achieving Financial Close due to events beyond control of the successful bidder/sponsor will be accommodated through day-to-day extension allowed under the IA. BPDB and the power purchaser will require the successful bidder/sponsor to submit periodic progress reports regarding the status of contractual obligations. PPA / GSA / FSA / CSA and all other agreements with any governmental entity. consents. Similarly. The power generated will be sold in order of priority to power purchasers in one of the following three modes or combination of more than one of the modes.3 Project Implementation 51. The Performance Guarantee will be encashable on call by BPDB. financial and physical progress reports including summary table showing progress towards achievement of such milestones.1 Sale to Distribution Company (DISCO) 53. the LOS will govern the project and supersede all documents and agreements.

7. 8.1 TARIFFS Point of Delivery 58. The power purchasers will. Design of the lines and interconnection will be as per standards adopted by the DISCO / NTDC to ensure uniformity within the existing system. This arrangement will be subject to an agreement between the sponsors and the GOB. maintenance and operation of the power system. The power generated may be delivered to the industrial estates in the vicinity of power plants where the power will be delivered to the purchaser(s) directly as bulk supply. The seller shall hold a license from BPDB allowing construction.3 Sale Exclusive for an Industry or for any other Special Purpose 55.Balochistan Power Generation Policy 2007 6.2 Sale to Industrial Estate as Bulk Consumer 54. 7.2 Alternate-II : Equity Participation 57. 6. as per standard designs/instructions adopted by DISCOs to ensure uniformity of the power system. The Government of Balochistan may further extend the lease period for the remaining life of the project if required as per terms & conditions of the agreement. under the requisite license from BPDB. the Government of Balochistan may hold a percentage of equity proportionate to the amount of lease charges of the project’s concession period. Instead of charging lease amount. The delivery point will either be the bus bar of the power plant or a specific location on the grid of the power purchaser. 8. 7.1 Use of Land Owned by Government of Balochistan Alternate-I : Lease of GOB’s Land 56. construct transmission lines from the sponsors outgoing gantries and interconnection at their premises for drawing the power. The power purchaser will construct the lines connecting the sponsor’s outgoing gantries with thei r interconnections. The power may be sold to single purchasers for their exclusive use. The land for the project will be leased out to the sponsors either through bi-lateral agreement between the parties or through any other mechanism for an initial period of 30 years based on the prices prevailing in the area of the project. The power tariff payable under the PPA will be quoted at the point of delivery indicated in the RFP. depending upon one of the following options specified in the RFP: 17 .

2. In order to ensure the sustained interest of the sponsor during the entire life of the project.1 to 6.1 Currency of Tariff 59. expenses would be accounted for in the power tariff in the form of capacity and energy charges. 64. in the application to NEPRA for approval of the tariff and for obtaining the license from NEPRA. 61. For projects requiring substantial investment in dedicated production and/or transportation facilities for indigenous fuel. Specimen of a PPA issued by QESCO is at Appendix 2 for reference. subject to mutual agreement between the sponsor(s) of the project and power purchaser on the approved tariff of energy and capacity.Balochistan Power Generation Policy 2007 (a) The transmission line from the IPP outgoing gantry up to the delivery point including the interconnection will be built.2. The generation company shall negotiate the tariff with the power purchasers and shall specify the modes mentioned in section 6. the sum of EPP and non-debt related CPP (computed on a kWh basis at the reference plant factor specified in the RFP) will remain constant or increase over time. maintained and operated by the power purchaser. In this case. 67. The CPP will be expressed in Rs/kW/month and the EPP in Rs/kWh. The debt-related CPP stream may match the loan repayment stream. The RFP may specify a maximum percentage of the overall tariff for the capacity component.2 Tariff Structure 8.2 Capacity and Energy Components 60. 8. Any other arrangement different from the above. The CPP will be paid provided the plant is available for dispatch as per standards defined in the PPA. 63. Bidders will be asked to quote their tariff in two parts: (1) (2) Energy Purchase Price (EPP) Capacity Purchase Price (CPP). 62. will need approval of BPDB.3 for supply. The EPP will be paid based upon the amount of kWh of energy dispatched. 18 . The tariff will be denominated in Pakistan Rupees. 66. the power tariff will be the ‘bid and paid for’ energy and net capacity delivered at the outgoing gantry of the power plant. owned. (b) 8. 65.

8. All Sponsors would be required to submit yearly tariff profiles in real terms at the time of bidding. The above incentives will be equally applicable to private. Exchange rate fluctuations in excess of 5% during any month will be allowed. The reference value of the WPI for 'manufacturing' will be the most recent value notified (not less than thirty (30) days before the date of submission of the bid) unless notified otherwise in the RFP. The specific reference date will be stated in the RFP.Balochistan Power Generation Policy 2007 8. between the reference date and the date of payment.4 Escalation 71. These will be incorporated in the LOS.3 Exchange Rate Variations 68. Financial and Fiscal Regime 73. Adjustment for exchange rate fluctuations will be effected quarterly. The reference rate for foreign exchange shall be the National Bank of Pakistan (NBP) TT & OD selling rate of the US Dollar prevailing thirty (30) days before the required date of bid submission. 69. which are escalable for Pakistan Rupee inflation. Bidders may include separate components in the CPP and the EPP which are subject to adjustment only for variations in the exchange rate between the Pakistan Rupee and US Dollar.3 Yearly Profile of Tariff 72.2. BPDB shall assist the sponsors in arranging the financial as well as fiscal incentives as mentioned in Para 75 from the federally controlled agencies / institutions as may be required to implement the projects under this Policy. 75. The RFP will specify the actual date for this reference value of WPI for 'manufacturing'. 70. Such Pakistan Rupee escalation will be effected from the bid submission date by the Pakistan Wholesale Price Index (WPI) for 'manufacturing' as notified by the GOP's Federal Bureau of Statistics (FBS). The security package for projects up to 50 MW includes the following salient features:- 19 . SECURITY PACKAGE 76. 8. shall be applicable to the projects to be developed and implemented under this Policy. Escalation for dollar components to cover dollar inflation will not be provided. The financial and fiscal incentives prescribed by the Government of Pakistan under any Federal law. However. public-private and public sector projects. bidders may include components in the EPP and CPP. 9. 74. 10.2.

geological conditions.1 to 6. The terms and conditions of the executed agreements shall be guaranteed during the term of the agreements. transmission line requirements. monthly profile of energy potential. optimum net capacity. The requirements as laid down by Pakistan Environmental Protection Agency (PEPA) and by the Provincial Environmental Protection Agency (Balochistan-EPA) relating to National Environmental Quality Standards (NEQS) and Environmental Impact Assessment (EIA) will be met. GSA and CSA will be provided as applicable for private/publicprivate partnership Power Generation projects under this Policy to eliminate the need for protracted negotiations. the National Power Control Center (NPCC) shall despatch the plants in accordance with the most economical despatch criteria (without any bias) wherever it applies.3 respectively. The feasibility studies will identify basic parameters of the thermal projects. Because of the very low variable cost. estimated annual plant factor. FSA. which will be on the basis of the lowest energy cost component. the concerned DISCO shall despatch the plants through their local Load Despatch Center. The following agencies shall be the executors of the Agreements to cover implementation and operational obligation of the projects: (j) (a) (b) Government of Balochistan & project sponsors for IA. 11. The transmission voltage shall be 132kV or 11kV depending upon the generation capacity and dispersal to individual or combined modes specified in Section 6.Balochistan Power Generation Policy 2007 Model IA. When the power Generation plants are connected to the 132 KV grid system. the hydrological characteristics of the site. system stability and reliability and other considerations. For the plants not connected to the 132 KV grid system of NTDC. identification of power delivery point.2 Feasibility Studies 79. 20 . such as. All provisions of the Pakistan Environmental Protection Act 1997 will be followed. PPA. (iii) Concerned agencies and project sponsors for FSA. 12. etc. SPECIFIC PROVISIONS 12. GSA & CSA Agreements (as applicable). (ii) Concerned power purchaser and project sponsors for PPA. 12. THE ENVIRONMENT 77. interconnection voltage. thermal plants are likely to be despatched with the highest priority. transmission line losses.1 Dispatch 78.

13. PUBLIC .Balochistan Power Generation Policy 2007 80. to examine. at its own cost. evaluate and form its own conclusions on any or all aspects of the feasibility study. The Government of Balochistan encourages establishment of Power Generation projects in public-private partnership.5 here above. the Government of Balochistan will not guarantee their content or conclusions.PRIVATE PARTNERSHIP 81. The bidder/sponsor will have the right. 21 . In line with the objectives set forth in Section 1. the incentives/concessions available to private Power Generation projects will also be available to projects implemented under public-private partnership. and to carry out any additional studies and investigations to make its own assessment about the feasibility and viability of the project. While feasibility studies will be carried out in accordance with internationally acceptable standards.

II.Balochistan Power Generation Policy 2007 Incentives available to private Power Generation projects will also be available for projects implemented under public-private partnership Appendix – 1 I. and its successors and assigns of the one part hereinafter called “Power Purchser” AN D 3. BOO Under BOO regime the total paid back cost would be the ‘Loan’ and ‘Return on Equity’ through the tariff while the ‘Equity’ would stay in the project and thus would remain as the investment asset of the stakeholder at the end of the project life. BET W E EN 2. Appendix – 2 Standard Power Purchase Agreement for Small Power Producers (SPPs) POWER PURCHASE AGREEMENT 1. with its principal office at ________________. a [public/private] limited company established under the laws of Pakistan. 22 . After concession period the tariff already enunciated in the Agreement would be reworked for a mutually agreed revision or else the Government would be at liberty to decide the fate of such power generation plant including its sale to any other client. BOOT Under BOOT regime the ‘Loan’. ‘Equity’ and ‘Return on Equity’ would be paid back within the concession period as capital cost of the project would become zero (0) within the concession period. and its permitted successors and permitted assigns of the other part hereinafter called “Company”: Both the Power Purchaser and the Company shall hereinafter also be referred to individually as “the Party” and collectively as “the Parties”. Pakistan. This Power Purchase Agreement is made and entered into as of _________ day of [month]. a [private/public] limited company incorporated under the laws of Pakistan. [Name of Company]. The project on expiry of concession period and maintained to generate power commensurate with its installed capacity would be transferred to the government against notional cost. Pakistan. with its Principal office at __________________.[year] at [name of city]. [Name of Power Purchaser].

“Power Purchaser” – [Name of Power Purchaser]. with its principal office at _______________________. in consideration of the mutual benefits to be derived and the representations. conditions and premises herein contained and intending to be legally bound. “Billing Cycle” i) The period starting from 12.The tariff component payable @ Rupees 1. insurance cost. return on investment.Balochistan Power Generation Policy 2007 WHEREAS the company will sell and the Power Purchaser will purchase from the Company electrical power on the terms and conditions set here-in-forth.2. “Metering System” – All meters and metering devices for recording of energy to be procured. with its principal office at __________________. ”Fuel Cost Component” – The tariff component payable @ Rupees 5.16 per kWh. and its successors. etc. “Fixed Cost Component” .2. tax on income of the Company. “Company” . warranties.00 hours of sixteenth day of each month up to 12.[ Name of company]. the Company and the Power Purchaser hereby agree as follow:Wherever the following capitalized terms appear in this Agreement.e. duties.00 hours of first day of each month up to 12. they shall have the meanings stated below: “Back-Up Metering System” all meters and metering devices to be procured. Rupees 22. and its permitted successors and permitted assign. the accuracy class of meters shall be 0. “Interconnection Point” – The physical point(s) where the Generation Facility and the 11 kV system of the Power Purchaser is connected at site at which the transfer of net electrical output occurs.00 hours of 1 day of the following month. a [ Private/ public] limited company incorporated under the laws of Pakistan.00 hours of sixteenth day of each month and ii) The period starting from 12. st 23 . Pakistan. NOW THEREFORE. This component will remain fixed over the term. “Generation Facility” – The RFO fired electric power generation station located on the site and having a capacity of [ ] MW approximately. a [ public/private] limited company established under the law of Pakistan. which includes but not limited to O&M cost.096 per Metric Ton and as adjusted from time to time. installed and tested by the company. installed and tested by the Power Purchaser. The accuracy class of meters shall be 0.04 per kWh at the Reference Fuel Price i. Pakistan.

Prudent Electrical Practices are not limited to optimum practices. methods or acts to the exclusion of all others. as required to comply with applicable industry codes. standards. safety and environmental standards of reputable international electric generation companies. c.096 per Metric Ton. and (ii) to protect the Generation Facility and the company’s employees and agents at the Generation Facility from malfunctions occurring on the grid system. agents and customers from malfunctions occurring at the Generation Facility. Prudent Utility Practices are not limited to optimum practices.Balochistan Power Generation Policy 2007 “Prudent Electric Practices” – The use of equipment. prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced generator of electricity engaged in the same or a similar type of undertaking or activity under the same or similar circumstances and conditions to those pertaining in Pakistan and satisfying the health. 24 . methods and acts which could have been expected to accomplish the desired result at reasonable cost consistent with reliability and safety. 6. diligence. employees. but rather are a spectrum of possible practices. but rather are a spectrum of possible practices. methods and procedures conforming to safety and legal requirements which are attained by exercising that degree of skill. but rather are a spectrum of possible practices. b. methods and acts which could have been expected to accomplish the desired result at reasonable cost consistent with reliability and safety. The quality of electric energy shall be ensured by the Company through installation of necessary equipment required as per Prudent Electrical Practices and Prudent Utility Practices. “Prudent Utility Practices” – Those practices. practices or methods. methods or acts to the exclusion of all others. The Parties further agree that: a. methods or acts to the exclusion of all others. “Reference Fuel Price” The delivered price of RFO at the Generation Facility as on 15-072006 which is Rupees 22.20.kWh inclusive of Fuel Cost Component but excluding GST. The meter reading will be recorded by Power Purchaser’s authorized persons in the presence of the Company’s representative as per Billing Cycle and the Company will submit its energy invoice accordingly. The Company will provide [ ] MW of powr at a voltage of 11 kV and at 50 Hz ± 1% in nominal Component and Fixed Cost frequency with a tolerance of ± 5% in nominal voltage and frequency. and regulations in Pakistan (i) to protect the grid system. The Company shall sell and the Power Purchser shall purchase the electric power at a price of Rs.

the Power Purchaser shall test the accuracy of the metering System and recalibrate the Metering System. Such replacement shall be at the sole option of the Power Purchaser and at its expense.Balochistan Power Generation Policy 2007 d. for the rates of fuel for the Billing Cycle. the recordings of the Back Up metering system or any other mutually agreed arrangement may be adopted. If the Power Purchaser fails to makes the payment by due date then the Power Purchaser will pay to the Company late payment charges @ 0. The Company will provide documentary evidence from the fuel supplier.5% per months. i. RFO ref: Reference Fuel Price of Rs. h. the Company shall be bound to test and calibrate the Back Up Metering System to the satisfaction of the Power Purchaser. th f. The Power Purchaser will make payment against energy invoice on or before 15 day from the date of receipt of the invoice.04 RFOref Where: FCC rev:Fuel Cost Component applicable for the Billing Cycle RFO rev: Revised RFO delivered price per Metric Ton applicable for the Billing Cyele. On the initial or any subsequent replacement(s) of the Metering system the Power Purchaser shall have the right to affix seals on the tested and calibrated meters but in the presence of Company’s authorized representative. In the event of complete or partial damage to the metering System the same shall be replaced. The seller shall provide access and facilitate authorized representative of the Power Purchaser to monitor activities relating to power dispatch. the company will inform the Power Purchaser immediately and the Company will switch on the feeder. g. in case of doubt by any Party about the accuracy of Metering System. Either Party shall giver prior notice. not less than forty-either (48) hours to conduct such tests. In case of a permanent fault on any feeder. If the Metering System is found to be in order. The Power Purchaser shall install the Metering System with meters of 0. Furthermore the company will submit evidence of procurement of the fuel along with its source of supply.5%).096 per Metric Ton e.5. If either of the metering systems differ from the other by an amount greater than onhalf of one percent (0.2 accuracy class in the metering room at company that. The fuel Cost Component will be adjusted for any increase or decrease in the RFO price during the Billing Cycle according to the formula: FCCrev  RFOrev  Rs. only after 25 . 22.

In case the dispute is not resolved within thirty (30) days after the date of receipt of notice described in section(o) by the relevant Party (or within such longer period of time as the Parties may agree). m. any and all losses incurred. Chief Executive officers (CEOs) if each Party shall meet in [ name of city ] to attempt in good faith to resolve the dispute. its officers. Either Party shall be responsible to adopt all safety measures according to the Prudent Electrical Practices on respective sides of the Interconnection Point. There will be no liability on any Party except the payments due to either Party prior to termination of the agreement. The arbitration shall be conducted in [ city ] Pakistan. 26 . r. The company will develop its maintenance schedule with the consent of the Power Purchaser so as to ensure stable and reliable supply to Power Purchaser’s network. Either Party can terminate this agreement by giving a three-month advance notice. and hold the Company. l. the company. directors and employees against. any Party may initiate arbitration proceedings under the Arbitration Act 1940. sustained or required to be paid. for itself and as trustee for its officers.Balochistan Power Generation Policy 2007 obtaining the clearance certificate from an authorized person nominated by Power Purchaser. p. n. o. The company will immediately inform Power Purchaser about power supply failure due to defect/mal operation of the Generation Facility. q. k. s. The Party reporting the existence of a dispute shall give to the other Party written notice setting out the material particulars of the dispute in the written notice. by. In the event that a dispute arises. Except as specifically provided elsewhere in this agreement. Company will serve at least a 48 hours notice to the Power Purchaser regarding any planned shut down. at all times after the date hereof. or sought to be imposed upon. the Power Purchaser shall indemnify and defend the Company. suffered. j. directly or indirectly. directors and employees harmless form. the Parties shall attempt in good faith to settle such dispute through their chief Executive Officers (CEOs) by mutual discussion within thirty (30) days after the date that the disputing Party delivers written notice of the dispute to the other Party.

suffered. and hold the Power Purchaser. Except specifically provided elsewhere in this agreement. for itself and as trustee for its officers. or sought to be imposed upon. at all times after the date hereof. ] year ________________________________ Authorized Representative of Company __________________________________ Authorized Representative of Power Purchaser WITNESSES ________________________________ WITNESSES __________________________________ 27 . sustained or required to be paid. directors and employees against. The term of this agreement is [ and is effective from the date of signing by the both the Parties. any and all loss. incurred. its officers. the Company shall indemnify and defend the Power Purchaser. directors and employees harmless from .Balochistan Power Generation Policy 2007 t. In WITNESS whereof the Parties hereto have signed this Agreement on the day and year first above written. the Power Purchaser. by. directly or indirectly.

.

Balochistan Power General Policy 2007 Coal Based Power Plan Renewable Technologies .

Civil Secretariat. please contact BALOCHISTAN POWER DEVELOPMENT BOARD Irrigation and Power Department Block # 7.For further information. Quetta Tele: 92-81-9202720 Fax : 92-81-9202262 .