Pakistan's power regulator has greenlit a long-term tariff for a key hydropower venture in Azad Jammu and Kashmir, a decision that resolves years of financial wrangling and sets the stage for the project's operational stability. The approval, issued by the National Electric Power Regulatory Authority (NEPRA), fixes the electricity rate for the 102 MW Gulpur Hydropower Project at US cents 9.3843 per kWh over a 30-year period, a move that ends a protracted dispute over currency fluctuations and cost adjustments. Main Developments Under the newly approved tariff structure, the project will charge Rs 17.3751 per kWh for the first 12 years, followed by a reduced rate of Rs 8.2686 per kWh for years 13 through 30. This translates to a levelised tariff of Rs 14.8507 per kWh, calculated based on a net contracted capacity of 100.98 MW and an annual energy output of 474.996 GWh. The tariff applies on a Build-Own-Operate-Transfer (BOOT) basis starting from the Commercial Operation Date (COD), with debt servicing scheduled to conclude within the first 12 years of operation. This structure aims to balance early revenue needs with long-term affordability for consumers. Read also: Pakistan Weather: Heat Peaks in Larkana, Rain Risks in Lahore Notably, the decision includes a dissenting note from Member (Tariff and Finance) Amina Ahmed, who argued that the regulator's refusal to allow exchange rate variation on certain engineering and construction (EPC) costs contradicts past practices. She highlighted that a $9.55 million electrical and mechanical component should have been indexed to foreign currency, citing the precedent set by the Laraib Energy project. Background The Gulpur Hydropower Project, developed by Mira Power Limited (MPL)—a subsidiary of Korea South-East Power Company (KOEN)—sits on the River Poonch in Muzaffarabad, AJ&K. It was initiated under Pakistan's Power Generation Policy 2002, with KOEN holding a 76 percent stake, DL Holdings 18 percent, and Lotte Engineering & Construction 6 percent. NEPRA's original tariff approval in August 2015 set a levelised rate of US cents 9.0241 per kWh, equivalent to Rs 9.4617 per kWh at an exchange rate of Rs 104.85/USD. However, the project faced severe liquidity constraints as debt repayments were tied to a much higher prevailing exchange rate of around Rs 150/USD, prompting MPL to file a modification petition in 2021. The regulator responded in March 2021 by allowing an interim tariff adjustment based on an exchange rate of Rs 158.25/USD—the rate at COD (March 10, 2020)—but subject to final adjustment. The project also experienced delays from force majeure events, which extended construction timelines and triggered additional cost claims that moved through regulatory review. Why It Matters This tariff approval provides financial certainty to an IPP that has struggled with currency volatility, ensuring the project can operate sustainably while contributing to Pakistan's hydropower capacity. For consumers, the front-loaded tariff structure means higher rates initially but lower costs in the long run, a trade-off that reflects the need to service debt early. The decision also signals NEPRA's stance on exchange rate risk in power projects—a contentious issue that affects investor confidence. The dissenting note from Amina Ahmed underscores ongoing regulatory inconsistencies that could impact future IPP negotiations and the broader investment climate in Pakistan's energy sector. What's Next The approved tariff is now final, but the project's operational phase will be closely monitored to ensure compliance with the BOOT terms and the 30-year schedule. The resolution of the COD adjustment request, which was delayed for over three years, may prompt NEPRA to streamline its processes for similar cases moving forward. Meanwhile, stakeholders will watch whether the dissenting opinion leads to a policy review on exchange rate indexation for EPC costs, a matter that could influence future tariff determinations. For Mira Power, the focus shifts to maintaining generation output and meeting the contracted energy targets under the new rate structure.