Power purchase Policy Government is giving certain benefits to the investors in IPP to attract them to invest in IPP.

When investors came in Govt asked them to survey any potential site. The investors came up with the initial raw site investigation and capability report. When they present it to the Govt the Govt issue LI Letter of Intent: the investors is asked for credentials their Financial, Technical and operational capabilities to utilize a certain site, given a 24 month time and certain conditions/ mile stones upon the fulfillment of those conditions the government is then require a feasibility study. This FS is then evaluated by all the concerned parties (technical, financial, independent observes, distribution, NEPRA etc.) upon the approval of this FS. The Govt then issue LS Letter of Support: this tells the investor that we support you for making this project and bring up the financial arrangements Letter of Implementation (important document coz it will be required for cashing all the benefits of the power policy. After the completion of all the requirements the investors sign this Agreement with the President of Pakistan to enjoy the privileges of the power policy. Government is giving certain benefits to the investors in IPP to attract them to invest in IPP There is no Tax (33% on income from selling the Electricity) Free Remittance and Conversion into Dollars Payments in US Dollars At least 17% minimum guaranteed return

Generation of Electricity WAPDA (Hydel) WAPDA GENCOs (Oil, Gas, Non Renewables) IPP: (hydro, Wind, Thermal, solar, ) implementation route, >50 PPIB or >50 wind or solar goto AEDB if < 50 provincial AJK I&P Merchant plants (personal consumption but dispatch through national grid. NTDC Power Purchaser PPA Distributions DISCOs, Power Grid 500 KVA 132, 50 11KVA) step down Transformer (25,50,100,500 kv) and (PESCO, IESCO, FESCO, QESCO) Bulk consumers (Mansha group) NEPRA (Regulatory oversight) Hyedel. Cheapest, Low wear n tear 100RPM, low running costs, 75-100 years useful life. No combustion process High time, labor intensive, dependent , cant store, constant flow. Remote areas. Infrastructure needed. Water diversion first, FS. Project spefic design, turbine, not available off the shelf. Time and capital intensive, planning. 50000 capacity and only 5000 is utilized. Peak hours maximum demand and minimum demand.. Base load plant: plant which can be start or stop according to demand. Expensive running costs. But

Energy Mix: theraml, wind, hydel, solar, nuclear to maximum, Weighted average costs is the cost of energy for your country. Your Energy mix should be such that it address and fulfill the maximum demand and also have the lowest energy cost per unit. IMF Vs Govt. IMF wanted to ensure the payment of installments. And their principal so they needed to remove subsidy but govt could not take the heat so they increase the taxes (tax reforms) Indexation: Third party Variation. Should be adjusted in the Tariff should be adjusted for variation in order to guarantee the return. Oil: Oil has limited reserves and there is high demand than supply and the overall reserves of oil in the universe are decreasing... so the price is increasing. Interested rates are changes (LIBOR, KIBOR changes) loan pay back. Interest expense accorded Exchange rates are increasing decreasing ($ to rupees exchange rate changes) Consumer price changes. Indexation. Opex