NATIONAL TRANSMISSION AND DESPATCH COMPANY

TARIFF

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540 WAPDA HOUSE, LAHORE, PAKISTAN TEL:+92 42 99202011, FAX: +92 42 99202410 cfo@ntdc.com.pk
Importance of Pricing

❑ Price of each commodity is set to recover the operating and

maintenance cost of doing business and a reasonable return
on investment involved in such business.

❑ The price is generally set according to the demand and

supply principal in a free market environment.

❑ In regulated markets, price is set by the regulator according

to cost of service & reasonable return determined through
regulatory process and in accordance with preset guidelines
and standards.
Tariff Setting in Power Market

❑ The Pakistan power market is a regulated market

since 1998 by independent regulator whereas earlier it
was regulated by Government of Pakistan (GOP).

❑ Price/Tariff for Generation, Transmission and

Distribution segments and setting of consumer end
tariff is designed by NEPRA in light of Tariff
Standards & Procedure Rules, 1998 as well as the
policy direction of the GOP.
NEPRA (Tariff Standards and Procedure) Rules, 1998.

❑ “Tariff” means the rates, charges terms and

conditions for generation of electric power,
transmission, inter-connection, distribution services
and sales of electric power to consumers by a
licensee.
❑ Any licensee, consumer or person interested in the
tariff may file a petition with the Authority by filing
it with the Registrar along with such fees as may be
determined by the Authority from time to time. The
Authority may also initiate proceeding suo moto.
NEPRA (Tariff Standards and Procedure) Rules, 1998.

There are a number of drivers which affect the cost, price and tariffs
such as Investment Program, Operating and Maintenance (O&M) cost of
existing infrastructure and cost of capital for new investment etc.

1. Tariffs should allow licensees the recovery of any and all costs
prudently incurred to meet the demonstrated needs of their
customers,

2. Tariffs should generally be calculated by including a

depreciation charge and a rate of return on the capital
investment of each licensee commensurate to that earned by
other investments of comparable risk;
Tariff Methodology
Sale Price = Cost Profit

Tariff/Use of System Charge = Revenue Requirement

Revenue Requirement = Cost Return on Capital Base

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 Components of Revenue Requirement
Sr .
Revenue Requirement
No.
1 General Estab &Admn
2 Repair & Maintenance
3 Insurance
4 Depreciation Cost
5 Financial Charges
6 Less: Other Income

7 Return on Capital Base

Profit
  Total Revenue Requirement
Total UoSC
Avg. Monthly Max Demand Indicator (MDI)
kW
  Rate Rs. / kW/Month = Per kW UoSC
Transmission Tariff Use of System Charges (UoSC)

The Transmission Tariff is also two-part tariff and determined by

NEPRA i.e.
a) Fixed Charge and b) Variable charge
 History of NTDCL Tariff

ST • Rs. 73.4/kW/Month
1 Tariff • Determined on April 14,2004

nd
• Rs. 100.15/kW/Month (Inclusive of income Tax)
2 Tariff • Determined on January 6,2006

rd
• Rs. 85.91/kW/Month ( Exclusive of income Tax)
3 Tariff • Determined on May 09,2011

th
• Rs. 102.43/kW/Month
4 Tariff • Determined on July 19, 2013

th
• Rs. 126.75/kW/Month
5 Tariff • Determined on October 20, 2015

th • Rs. 148.33/kW/Month
6 Tariff • Determined on May 04, 2018
Components of Revenue Requirement
General Admin & Establishment
Pay and Allowances Vehicle Running Expenses
Travelling Expenses Power, Light, Gas and Water
Rent, Rates and Taxes Communication
Office Supplies Professional Fees
Other Expenses

Repair & Maintenance

System Repair & Maintenance Vehicle Repair & Maintenance

Insurance

Assets of the company are protected /covered under WAPDA Equipment

Protection Scheme (WEPS) and insurance cost is calculated @ 0.30% of book
value of Grid Stations.

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Components of Revenue Requirement
Depreciation
Land @ 0% Civil works and building @ 2%
Transmission & Despatch Equipments @ 3.5% Furniture and Fittings @ 10%.
Furniture and Fittings @ 10%. Vehicles @ 10%
Office Supplies Office Supplies
Other equipments @ 10%.

Financial Charges
Borrowing costs that are directly attributable to Acquisition, Construction, or
Production of Assets form part of the Cost of Assets and therefore should be
capitalized. Other borrowing costs are recognized as expense.

Financial
Charges

Chargeable to Chargeable to
Operations Projects
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 Capital Base
A- Assets
i) Net Fixed Assets in Operation
ii) Capital Work in Progress (Development Program)
iii) Current Assets (Standard)
Sub Total (A)
B- Liabilities
i) Long Term Loans
ii) Other Long Term Liabilities
iii) Current Liabilities ( standard 2/3 of current Assets)
Sub Total (B)
Capital Base (A- B)