ISLAMABAD: The Pakistan Atomic Energy Commission (PAEC) has requested about Rs 14.5 per unit (7.87 US cents per unit) of level tariff for 40 years for its second 1,100 megawatt Mega Nuclear Power Plant (NPP) at Karachi (K-3) .

The plant (K-3) is the second in a series of two nuclear power plants of 1100 MW each and is currently in the test phase sending approximately 1050 MW of electricity to the national grid.

The first of the K2 series is already commercially operational with an average capacity payment price of Rs10 per unit and fuel cost of around 93 paisa per unit.

According to the tariff filed with the National Electric Power Regulatory Authority (Nepra), PAEC claimed the total project cost of Rs 723 billion, including engineering, procurement and construction (EPC) costs of Rs 554 .2 billion rupees and 66 billion rupees of non-EPC costs. The project claimed an interest of around Rs95bn during construction.

PAEC claims project will cost 723 billion rupees

He said the cost of the project, excluding interest during construction and financing charges, was $3,670 per MW and it would have an installed capacity of 1,100 MW or 1,017 MW of net generation.

Nepra had issued a production license to the K-3 plant in February 2021. The plant was completed in 97 months and is currently in the post-synchronization phase. The project involves 81% debt and 19% equity.

Interest on the external debt varied between 1 and 6 pc and the local financing cost of Kibor plus 0.5 pc per year. The debt repayment period is 6 to 12 years and a rate on equity of 14.5% on the internal rate of return in Pakistani currency is assumed over the 40-year life of the project. Thus, the buyback of shares is targeted over 28 years from year 13 to year 40.

The reference exchange rate for the tariff was assumed at Rs153.60 against the dollar and Rs23.50 against the Chinese renminbi. The life of the project is extendable to 60 years. The fuel cost of K-3 at 93 paisa per unit was assumed to be slightly higher than 92 paisa per unit for K-2.

The petitioner claimed a total capacity payment price of 7.8697 cents per unit leveled over 40 years. Established at 153 rupees per dollar, the CPR was calculated at 14.67 rupees per unit for the first six years, followed by 14.21 rupees per unit for 7 to 12 years, then 6.53 rupees per unit for the following years. 13 to 40.

The plant was connected to the national grid and its generating capacity of 1,100 megawatts had reached criticality on February 21 this year and was undergoing certain tests and safety procedures before it could finally be connected to the grid for commercial reasons.

K-3 is the second nuclear power plant in Pakistan with a generating capacity of 1,100 MW and its addition to the national grid is expected to help reduce electricity tariffs in the country, PAEC said. The factories were developed with Chinese support.

K-3 is one of two similar nuclear power plants located near Karachi. The other, named K-2, was inaugurated by Prime Minister Imran Khan on May 21 last year. The inauguration of the two units (K-2 and K-3) was carried out by then Prime Minister Nawaz Sharif in November 2013.

Construction of K-2 and K-3 started in August 2015 and May 2016, respectively, after approval from the Pakistan Nuclear Regulatory Authority (PNRA). The fueling of the plant (K-3) began in December 2021 after obtaining authorization from the PNRA.

PAEC currently operates six nuclear power plants in the country. Two of them are located in Karachi, while four in Mianwali district – Chashma Nuclear Power Plant Unit 1-4. Previously, the collective generating capacity of all nuclear power plants operated by PAEC was over 2,400 MW.

The addition of K-3 to the national grid will increase the country’s nuclear power generation capacity to more than 3,500 MW, significantly improving the overall share of nuclear power in the energy mix. The K-2 project had started its activities in December 2020.

Posted in Dawn, April 9, 2022