Tariff Petition of Sapphire Wind Power Company

r- r, 1 : FAX NO.

313• Colton ExcJ a rqf Building,I. Chundrigar Road , Karachi-74M Pokiston

Phonm : 92-21.111-000.100Fm,: 92 -21-2416705, 92.21.2417418

E.moil : karoehi .olkco@sapphiro . eom.r,k

September 9. 201 1

Syed Safeer HussainRegistrarNational Electric Power Regulatory AuthorilyOPF Building, 2"" FloorShahrah-c-,1 am h urriyalG-5/2, TslarnahadFax: 051921 .02 15

22 Feb. 2009 O 3: 14AM P1

Sapphire Wind Power Company Limited

Mt CM r) } ^^r

Subject: Application for approval / determination of Generation Tariff of 50 MWWind Power Project at,lhimpir area , Taluka & District Thatta , Sindh.

Your ref.: NEP1tA /TRI'-100 /7571 dated 07.09.11

Dear Sir

Further to the above mentioned letter:r u ^-,i. .. ". _..'fl . Petit`

o^ ,;he last pa1D•e ofthe samei. We h;i a initialed a ll rT wo , ill ll c 1 al M 14lltl^^ and signed, the ruu^

ii. It may be noted that the Affidavit had already been stamped by the Notary Publiciii. AEDB's provi,ional ;leceptaitce of our feasibility is attached at Annexure Div, Our offer letter to NI T)C tier sale of power is artached at Annexure G

'I'hc Application for the approval /dclcrmination of the generation tariff is being re-submitted tier

consideration by NF,PRA,

Sincerely,

fill, +

313-Cotlon Exchange Building,

I.I. Chundrigar Road, Karachi-74000 PakistanPhones : 92-21-111-000-100

Fox:92 -21-2416705,92 -21-2417418E-mail : karachi . office@sapphire . com.pk

29 August 2011

pphire

Syed Safeer HussainRegistrarNational Electric Power Regulatory AuthorityOPF Building, 2"d FloorShahrah-e-JamhurriyatG-5/2, Islamabad

Dear Sir


Application for the approval /deterrnination of the generation tariff -Sapphire Wind Power Company Limited (the "Company") -50 MW Wind Power Project at .lhirnpir ( the "Project")

Appended herewith is our application for the approval /determination of the generationtariff pursuant to the NEPRA Act and the applicable Rules. Alongside this application,we are filing an application for the grant of a Generation License.

We hereby re-,Ll .., ?sIr nR tl,,,t tt, 'EPIC

est̂ l^ L Contracts and the UcY^.IVI Contract(s) Shouldkindly he held in strict confidence and should not to he published or uploaded onNEPRA's web-site, or otherwise disclosed to the general public.

We look lorward to working with you to complete the regulatory process and therebyachieve financial closing for this Project at the earliest.

Yours sincerely,

For and on behalf ofSAPPHIRE WIND POWER COMPANY LIMITED

Nadeem AhdullahChief Executive

C\

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i?, C'"iikui i \ch:uitr liuildlnr.

L L C'1 iulri'^:u 1ZuMJ,Itiarnrlu-!- 2111), Pakislun.

Ph o nes 9 2 21 111 1)1)1) 11)1) - 24109?If

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EXTRACT OF RESOLUTION PASSFI) in, TILE BOARD OF DIRECTORS OFSAPPHIRE, WIND POWER ('OI\IPANY LII\MITEI) IN ITS MEETING 11FLI) ON2-ITtt AI1(:115"1', 2011 AT 11:110 A.M. Al' TILE REGISTERED OFFICE OF TIIFCOMPANY 212, CO'I'"I'ON EXCHANGE 11111LI)IN(:, I.LCIIUNDRI (:AR ROAD,KARA(_ I l l

"IZFSOI,\'I I) 't'll.A'F cacti of I\1 r. Nadeem :\htlullah (Chief Executive Officer) and

Mr. Khalid :\slanr (Technical Director) he and are hercl ►y jointly and severalty

aiillio•ixetl to file (i) an application fur the grant of a generation license; ( ii) an

application fur the determination of generation tariff (including any rev lew

petitions); and (iii) and documents in support thereof anti/or to make any

oral/written representations on hehalf of Sapphire \Vintl Power C'onrp:uty i.imited,

before the National Fleett is Po\\ er Regulatory Anthori(y in relation to the Sapphire

\Vioott Power ('otnpant I,inritetl's 511 \I\\' \\"Intl po\\er• project at ,Ihampir Area.

Taluka & District l'haIIa, Sintlh, Pakistan; and to undertake any matter(s)

necessary or incidental there(o."

(ertifictl that ii ► c• aho\e resolution (i) t as dui passed h^ the Board of Directors of

Sapphire Wind Ptn\er• (onlpan) Limited in it meeting at Wltich a quorum or

tlirech ► rs Was present; and (ii) has not been rescinded and is in operation and that

this is a true co1y of' (lie said resolution .

Company Secretary

0 U 6

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rc:::r Habib::M "o ►olf f` Bon's UMBD 0 8 6 4=0 2

-. 7.... 1? 7

Guluer^^r Orarich 6., 11C -. 35Lahore Date: Auy 25 2011

ON f1M ND P A Yr ATIUN ELECTRIC PO WER' RCGULAIORY F -'I I;OF:ITY OR ORDER

1:u(:^ s i ll.! t ;lut"I .'r^^t ctl _i forty 1 hli,U;,arli^ nightAy four

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Habib Mc trc of 1 to 17 ! f) ri 1.- i:.

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8^- J - A^^horlar1>led

eture „ Signature

BEFORETHE NATIONAL ELECTRIC POWER REGULATORY AUTHORITY

IN RE: APPROXIMATELY 50 MW WIND POWER COMPLEX AT JHIMPIR AREA,TALUKA & DISTRICT THATTA, SINDH , PAKISTAN

AFFIDAVIT

1. Nadeem Abdullah. Chief Executive Officer. of Sapphire %Vind Power Company Limited.address 212. Cotton Exchange Building, I. I. Chundrigar Road. Karachi, do hereby declare andaffirm on oath as under:

1. That the accompanying Tariff Petition has been filed before the National Flectric PowerRef ul n ut

hvu,.ri J the

r^ ty and tue iUIItCRts of the same may kln (liv be rears as an inta'ral n. pa. .of this affidavit.

That the contents of the accompanying Tariff Petition are true and correct to the best ofm knowledge and belief and nothing has been concealed or mis-stated therein.

Deponent

Verification

Verified on oath at Karachi on this 25'h day of August 2011 that the contents of the aboveaffidavit are true and correct to the best of my knowledge and belief.

Deponent

LiUS

VAKALATNAMA

We, Sapphire Wind Power Company Limited (the "('.ompany"), hereby appoint and

constitute jointly and severally MR. NADIR ALTAF and MR. WASEE-UL-HASNAIN

NAQVEE to appear and act liar us as our advocates in connection with the processing and

presentation of the Company's Application for Tariff Determination ( the "Petition "), in relation

to the Company's proposed 50 MW power project at .lhimpir Area, Taluka & District Thatta,

Sindh, Pakistan, with the National Electric Power Regulatory Authority ("NEPRA").

We also authorize the said advocates or anyone of them to do all other acts and things necessary

liar the processing , completion and finalization of the Petition with NEPRA.

Signature:

Received by us:

From:

RIZVI, ISA, AFRIDI & ANGELL

ADVOCATES &CORPORATF ('OUNSELLOI:S

68 NAZIMUDDIN ROAD, F-8/4,ISLAMABAD

UAN: III-LAWYER

313.Ca1ton Exchange tluiling,I.I. Chundrigor Rood, Karachi -74000 Pakistun

Phones : 92-21-I11 -000-100Fax: 92 .21-2416705, 92-21-24174113

E-mail : korachi.office (dsapphire -com.pk

29 August 2011

Syed Safeei- HussainRegistrarNational Electric Power Regulatory AuthorityOPF Building, 2iic1 FloorShalirah-e-JamhurriyatG-5/2, Islamabad

Deat- Sir

Sapphire Wind Power Company Limiter

Application for the approval/determination of the generation tariff-Sapphire Wind Power Company Limited (the "Company") -50 MW Wind Power Project at Jhimpir (the "Project")

Appended herewith is our application fbr the approval /determination of the generationtariff pursuant to the NI--1'I-:A Act and the applicable Rules. Alongside this application,we are filing an application for the grant of'a Generation License.

We hereby request NU'T '.A that the FP( Contracts and the O&M Contract(s) shouldkindly he hold in strict ccllilldrl,ce and Should not to he published or uploaded onNEI'RA's web-site, or otherwise disclosed to the gene-al public .

We look forward to working with you to complete the regulatory process and therebyachieve financial Project at the eat hest.

i ours sincerely,

For and on behalf ofSAPPHIRE WINE) POWER COMPANY LIMITED

Nadecm AbdullahChief Executive

t

1;11]

SAPPHIRE WIND POWER COMPANY LIAIITEI) TARIFF PETITION

BEFORE

THE NATIONAL ELECTRIC POWER REGULATORY AUTHORITY (NEPRA)

TARII F PETITION

PURSu.\N"I•'l•O NEPRA ('I'.\RlI I' S'I \Nl ).\Itl)S .\NI) PR( )(aiUURI :^ Rul.l'.S, 1998

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ON lil(II.\I.I (11

SAPPI TIRE FIND POWER COMPANY LIMITED

FOR NEPRA's.vI'I'ROv'.vI. ( 1?J.I I:I?I.:N( I( GI NI{It:v'1'!UN "1'.Alttt t' I UR

SAPPHIRE WIND POWER COMPANY LIMITED

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JI L\N(I'II(, SINI)I I

DATED :. lugusl 30 ''', _011

AI)17RI:SS: 313, Cotton Exchange Building, I.I. Chundrigar Road, Karachi

Phone #: 0092-21 - 111 000 11)1)

lax #: 11092 -21-32" 416705

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SAPPHIRE WIND POWER COMPANY LIMITED TARIFF PETITION

Cop OFSAPPHIRE WIND PO ER COMPANY LIMITED

BOARD RESOLUTION

SAPPHIRE WIND POWER COIIIPANI' LIMITED TARIFF PETITION


C pY OF AFFIDAVITS

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SAPPHIRE WIND POWER COMIPANY LIAIITEI ) TARIFF PETITION

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TARIFF PETITION

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SAPPHIRE WIND POWER COMPANY LINIITEI TARIFF PETITION

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SAPPHIRE WIND PONDER COMPANY LIMITED TARIFF PETITION

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TABLE OF CONTENTS

1. Details Of The Petitioner ....................... ..................................................................................11

2 . Regulatory 1 ramework Leading to Tariff Petition.............................................. 12

3. Executive Summary ...................................................................................................................16

4. Rationale for \Vind power .........................................................................................................23

5. Project Cost and Tariff ..............................................................................................................32

6. Project Funding Structure (Debt &Equitvv) ............................................................................42

Operation Cost ............................................................................................................................498. Proposed Reference Generation 'T'ariff & Debt Schedule ....................................................569. Indexations , Escalations And Cost Adjustment ....................................................................6110. Considerations With Respect 1b EPA ..................................................................................6711. General Assumptions ...............................................................................................................8212. Tariff Summary ........................................................................................ . 85................................

() 1`.a 9


ANNEXURES

Following P ertinent informatio ) is hereto a! [ached for N Ell ILA:

(a) ANNEXURE A -LI:'ri'1•:It 01; fN'I I N'I';

(b) ANNEXURE B -1'1 :(:I INu:,\I Fl {.\SII111.I 1'1' .\i'I'RO\',V.;

(c) ANNEXURE C - NTDC - C; K11) C( . )NN I:(;1'1ON Al'1 ']t(\'.11.;

(d) ANNEXURE D - Pit( )VISION \I . API'RO\'•11, OI FI: sI1 11.1'11' S' 1'lil^l' RYAEDB;

(e) ANNEXURE E - DHI'1' FIN.\NCINU TIT m SI II-1-:1

(f) ANNEXURE G - P( )\C'I:It PURcI I.\SI:R CONSENT LE'ri'IiR

(g) ANNEXURE H - INI-11.AI. E^`V'lit( (N^111:N1'.A1. E\.At'IIN:ATI( )N (lEE) .^PI'It0V':AI.

1 (0


1. DETAILS OF THE PETITIONER

NAME AND ADDRESS

ICI/s Sapphire Wind Power Company Limited

ADDRI Ss: 313, Cotton Exchange Building, 1.1. Chundrigar Road, Karachi

Phone #: 0092-21-111 000 100

fax 0092-21-32416705

REPRESENTATIVES Ot M/S SAPP] [IRE WIND POWER COMPANY LIMITED

• Mr. Nadeem Abdullah:Authorized Representative , Sapphire Wind Power Company Limited

• Mr. Khalid Aslam:Authorized Representative , Sapl)hire Wind Power Company Limited

02 1 . 11I 1-1


2. REGULATORY FRAMEWORK LEADING TO TARIFF PETITION

2.1 NATIONAL ELECTRIC POWER REGULATORY AUTHORITY - THE

COMPETENT AUTHORITY FOR DETERMINATION OF TARIFF

NEPRA Act & NEPRA Rules

Under the Regulation for Generation, Transmission and Distribution of Electric

Power Act (XL of) 1997 (the NEPRA Act), the National Electric Power Regulatory

Authority (NEPRA) is responsible, inter alia, for determining tariffs and other terms

and conditions for the supply of electricity through generation, transmission anddistribution. NEPR\ is also responsible for determining the process and procedures

for reviewing tariffs and recommending tariff adjustments. Further, pursuant to the

enabling provisions of the NEPR\ Act, the procedure for tariff determination has

been prescribed in the NEPRA (Tariff Standards and Procedure) Rules, 1998 (the

NEPRA Rules).

`Policy for Development of Renewable Energy for Power Generation 2006' &

`Guidelines for Determination of 'tariff for Wind Power Generation 2006'

In order to avoid multiplicity of entities and stages of negotiations fc,,- tariffnegotiations, paragraph A.7.2 (Negot;itteel7tri//Jor Unsolicited Proposals and (-fp-front Tarili)of annesure A (Grrir!;kif,s for I)eterr»,u,rtiu/r o/ Jarifj^or Grid C a/rne,7rrl IP!'3) of Policy forDevelopment of Renewable I[nerp,v for power Generation 2006 (the RE Policy2006), issued by the Government of Pakistan in 2006, states:

5 /.i/c'.i U/'.11

liei'OtldllOrl.l' Wi// !, 3 .rr ,n::(ea i il,

rlrlerniinatroa of J a,l er nnn parr 1 irirlfs for RE !PP;. l; an I!'P wt:rhe.r to strhnrit

u,: l!/uo/iiitea oYPo. rd (J/rd. wan!, to Set:le !a/71j throii /, rrCgotialion.r NEPIZ-1

wi// rle/errni/le the taxi/f iii ronsnii iou with the IPP, The Power piirchurer(c rnrd

other stakeholrkrs

Further, pursuant to section 4.2.1 of the Guidelines for Determination of Tariff for\C'ind Power Generation 2006 (th( Wind Tariff Guidelines 2006), issued by theGovernment of Pakistan under Section 7(6) of the NEPRA Act, if a wind power IPPwants to settle tariff through neg"dations_ NEPR'1 shall determine the tariff inconsultation with such wind power I IT. the power purchasers and other stakeholders.

2.2 PROCESS OF ISSUANCE OF LETTER OF INTENT LEADING TO TARIFF

PETITION

Request for issuance of "Letter of Intent" by Sapphire Wind Power CompanyLimited and issuance of "Letter of Intent"

Alternative Energy Development III and (the AEDB) vide its letter # B/3/16/2006dated August 10''', 2006, issued an Letter of Intent (the LOI) to Sapphire Wind PowerCompany Limited (SWPCL or the Project Company) and requested the Project toproceed with carrying out the feasibility study for setting up a wind power generationproject. A copy of the LOI is attaclicd hereto at Annexure A.

12


Submission of the Feasibility Study and approval of the same

In compliance wirh the rrequiremme;its laid out in the RE Policy 2006 and the LOI,

Sapphire Wind Power Company Limited completed the detailed feasibility study for

the project and submitted the same to AEDB for their review ( the Project Feasibility

Study).

Following completion of its detailed review , AEDB, vide its letter dated October 16,

2009 (Ref: B/3/ 1 /S\\'PCL/07) (the Feasibility Study Approval Letter ), granted

partial / conditional approval of the Project Feasibility Study of Sapphire Wind Power

Project. A copy of the Feasibility Study Approval Letter is attached hereto at

Annexure B.

The Feasibility Study Approval letter stated that final approval of the Project

Feasibility Study was Gnked with the approval of the following (the Conditional

Matters):

(a) Grid Interconnection Studies approval from National Transmission andDespatch Company Limited (the NTDC);

(b) Verification of the 'Pow,ver Productiwi Estimates' from Risoe.

For the benefir of N1:PR.\, an update on the status of the Conditional Matters is asfollows:

(a) Grid Interconnection Studies approval from NTDC

In compliance with NTT-)C rcalui lienrs, Sapnhtre \r'ind Power Company Litruted^ t

engaged Power Planners lnternat-mna! (the PPI) for conducting the grid inter

connCCtioii ^tuci\'

Sapphire Wind Power Company Limited submitted the detailed Grid InterconnectionStudy for its wind power project to Pakistan Electric Power Company (PEPCO) onMay 12,2_009 for PEPCO 's approval.

The Grid Interconnection Studies covered all aspects of the wind power projectincluding:

(i) Load Flow Analysis;

(ii) Short circuit analysis;

(iii) Transient Stability Analysis; and

(iv) Power Quality Study indicatiaig suitable remedial equipment,

Since submission of the Grid Inter onnection Studies, constant follow-up has beenmaintained with PL:PCO / N'I DC and r\EDB at various levels. NTDCcommunicated their comments to Sapphire on the Grid Interconnection Study and inthe light of the same, Sapphire submtted the revised Grid Interconnection Study toCPPA / NTDC.

L 131,;

SAPPHIRE WIND POWER COMPANY LIntITE1) TARIFF PETITION

Subsequently, GM Planning Power NTI)C, vide the letter # GMPP/CEMP/TRP-380/7078 dated Nov 30"', 2010 accorded approval of the Grid Interconnection

Studies. A copy of the NTDC letter is attached hereto at Annexure C.

(b) Verification of the `Power Production Estimates ' from Risoe

Pursuant to its Project Fcasibihty Study, Sapphire has submitted its "Power Production

Estimates" (PPE) to AEDB, who further have submitted the PPE to Risoe (AEDB'sindependent technical consultants) for independent verification. It is understood thatfollowing RISOE's verification of the PPE, AEDB would be communicating the

energy estimates for the project to N)PRA.

Provisional Acceptance of the Project Feasibiiity Study

In light of the present status of the Project Feasibility Study, AEDB vide its letter #13/3/ I /S\\'CPL/07 dated August '7'!', 2011 has provisionally accepted the Project

Feasibility Study and the final approval of the final approval of the feasibility study willbe accorded by AEDB based on the verification of Power Production Estimates. A

copy of the AEDB letter for Provisional Acceptance of the Project Feasibility Study isattached hereto at Annexure D.

Request for Determination of Tariff

While a final approval of the Pr eject Feasibilir ; Study is pending to date, it is

highlighted that in order to expedite the process of obtaining Tariff and GenerationLicense for IPPs, AI.DB vide its letter # B/3 /1/S\\'CPL/07 dated August 27", 2011has allowed Sapphire \\'ind Powei Company Limited to proceed ahead with the

pp li^,rie^;; o f tarrtff ',• Nl:Pi2_\.

Based on:

(a) the status of Conditional Mat: rs provided in Section 2.2 .2 (Slrbmissiort of theFeasibility Sludy 411111 approval of '1 e moire) above, whereby Sapphire \\'ind Power

Company Limited, on their part, have undertaken and completed all activities

required for procurement of approvals of the relevant Conditional Matters fromvarious stakeholders - including the power Production Estimates verified by Risoefor AEDB and of its Grid Interconnection Studies from CPPA/NTDC;

(b) the Economic Corporation Council (ECC) instruction to NEPRA for acceptingTariff Petition only for IPPs with a firm and executed EPC Contract;

(c) the provisions of the 121, Policy 2006 relating to application to NEPI2A for itsdetermination of tariff following approval of the feasibility study, as read in lightof the express support of ;\El )B to expedite the tariff determination for theproject by NEPRA; and

(d) AEDB approval for allowing Sapphire Wind Power Company Limited to submitthe application of tariff to NEI'R.\.

It is submitted that the requirements of the regulatory process for applying to NEPRAfor its determination of the tariff for Sapphire \\'ind Power Company Limited's windpower project are complete.

^J


2.3 SUBMISSION

Pursuant to the reiev:uit provisions of the NE P 111 Rules, read with the provisions of

the NEPRA Act and the Rules and Regulations made there under; AND in accordancewith the RE Policy 2(106 and the \Vind Tariff Guidelines 2006; AND in view ofcompliance by Sapphire Wind Pov. er Company Limited and Sapphire Group (MainSponsors of the Sapphire Wind Power Company Limited) of the RE Policy 2006 in

respect of meeting the requirements of the same so as to be eligible for application for

a tariff: SAPPHIRE WIND POWER COMPANY LIMITED SUBMITS HEREWITH before

NEPRA, the competent regulatory Authority lawfully authorized to determine tariff forwind power generation companies, for its approval, a tariff petition (the TariffPetition) for approval of (i) the reference generation tariff ( the ReferenceGeneration Tariff); (ii) the energy production estimates; (iii) the Benchmark Energy

Table and Monthly Complex Power Curves; (iv) the Indexations and Adjustments; (v)

Adjustments at commercial operations date; and (vi) other matters set out in thisTariff petition, in each case, for S:pphire Wind Power Company Limited's 50 I\IW'power generation facility to be located at jhampir, Sindh.

Given the advance stage of the project, NEPIL1 is kindly requested to process theTariff Petition at the earliest, thereby enabling Sapphire Wind Power CompanyLimited to proceed further with the development process.

U2 i 15


3. EXECUTIVE SUMMARY

TARIFF PETITION

3.1 PROJECT SUMMARY

Since the issuance of the LOI on August 10'u', 2006, the Project Company conducted

various studies to assess the feasibility of the wind power project. The studiesincluded, to name a few, the wind resource assessment, geo technical survey,topographic study and grid interconnection study. Based on the studies conducted, theProject Technical Engineer i.e. hl/, Sgurr Energy completed the feasibility study forSapphire Wind Power Company Limited in October 2009; this was submitted by theProject Company to Alternative Energy Development Board (AEDB) for its review

and was subsequently partially/conditionally approved by AEDB on 16'u' October

2009 via letter B/3/ I /SWPCL/07.

Since the partial/conditional approval of feasibility study, Sapphire Group hascommitted funds and resources to move the Project towards Financial Close . In doingso, Sapphire group completed the conditions for the final approval of the feasibilitystudy and simultaneously developed a competent in-house team that consisted ofLegal, Financial and Technical Consultants . In order to select an EPC and O&hfContractor for the Project, Sapphire \\'ind Power Company Lirruted carried out aninternational bidding process and floated the RFP to 6 internationally renowned \X'TGsuppliers for awarding the turnkey F PC Contract for construction of the Project undera turnkey arrangement . After an extensive technical, financial and commercialevaluation process , Sapphire Group selected hf/ s China Machinery EngineeringCorporation (CMEC) as the preferred EPC Contractor , with General Electric (GE)supplying the Wind 't 'urbine (; ener . itors and also being responsible for of long termO&M of tile plailt.

C'tFC vv li ,,^^^ established to 1978' as the first national corporation integrating foretgntrade with industry, C:\IEC. is a I uee global conglomerate with the engineeringcontracting as its core business and its main business includes import and export trade,R & D work and design as well as international service. As a well-known internationalengineering contractor, CNIEC ranked 3"' amongst top fifty of China's enterpriseslisted by the Ministry of Commerce of China in terms of business turnover during2008. CMEC has been listed among the largest 225 contractors in the world byEngineering News-Record, a famous magazine in the United States, for severalconsecutive years.

GE Wind Energy, a branch of GE 1 :nergy (a subsidiary of General Electric), shall besupplying 1.5 xle wind turbines. In 2009, GE was the second largest wind turbinemanufacturer in the world. The l.`> NRC' Series is the most widely deployed windturbine with 16,500 plus turbines in.talled globally with availability higher then 98"o.Continual investment by GE to crease the highest capacity factor in its 1.5 M\\' class,has led to ensuring consistency in its workhorse reliability, ease of maintenanceplanning and high commonality in spare parts.

S\W-'PCI. has signed a turnkey EPC Contract with CNIE.C dated August 27", 2011.

The capital structure of the Project ik envisaged at 75:25 (Debt: Equity) with Sapphire

Textile Mills Limited injecting the full amount of equity required in the project. The

Project Company intends to obtain 57.94"o of debt through foreign sources in USD

while the remaining 12.06" will be funded through local sources in PKR.

160 1) ['

SAPPHIRE WIND POWER COMPANY LIMITE.D TARIFF P ET I T I O N

Debt for the project will be pruvidcd by:

( 1) EGO Trade & Development Bank - 31 . 04°/u (of Debt);

(2) Industrial and Commercial Bank of China - 56 . 90°% (of Debt); and(3) Consortium of Local Banks 12.06';0 (of Debt).

The signed term sheets for the financing of the Project are attached to the petition as

Annexure E.

3.2 SALIENT FEATURES OF THE PROJECT

Subject to the assumptions contained in this Tariff Petition, please find below a

summary of the Project for NEPRA's perusal:


Sapphire Textile Mills Limited

50NRX!

Jhampir, District Thatta, Province of Sindh, Pakistan

1,372 Acres

20 years Irony commercial operations date

Nationa l fransmt ssl nn and Despatch Coma 'I

Despatch Company L.imitcci (tiirnuyi,

Central Power P urch asinv Agency)

General !aectric 1.5 xle

Year I - 138.8 G\C'h,

Year 2-20 - 140.9 G\X'h

China Machinery Engineering Corporation (CMEC)

SS in '000)

AmountEPC Price 107,500LC ( onfirmation 1,095Non EPC Cost 1,348Project Development Cost 2,8911.ant1 Costs 119Duties & Taxes 719

Insurance during Construction 1,466Financial Charges 3,602Sino;ure Fees 4,635\Vorking Capital 992Interest During Construction 4,505Taw Project Cost (C 11'Li.^') 128,872

Debt 75", F.1uir' 25°',

17L.) a. I


US$ 32.2 million

US$ 96 . 1 million

Foreign I financiers

• EC() Trade & Development Bank (ETDB)

• Industrial and Commercial Bank of China (ICBC)

Local Fieeanciers

• Consortium of local banks

Currency Mix of US Dollars (87.94 %) andPakistan Rupees ( 12.06 °,'o)

Term Up to 12 years (door to door)

-Grace Period

tUp to 24 months

I

Repayment Period 10 years

Debt Repayment In equal semi-annual installments

Interes! Rate • For Local Currencv Debt- FBL & MBLBase Rate : 6 months KIBOR

ISpread: 300 basis points; and

t

• For Foreign currency Debt-ETDBBase Rare : 6 months LIBORSpread: 350 basis points + 100 basispoints (ADB RE, DSIP Guarantee)- ICBCBase Rate : 6 months LIBORSpread : 400 basis points+ IOU basis points (ADB REDSIPGuarantee)

General Electric

(US$ in '000)Years 1 -2 3- 1(1 11-20

O&M Cost 1,315 3,073 2,964Insurance 1,075 1,075 1,075Toted t) eratin g (-ojt 2,390 4,148 4,039

USO 14.2116 per kWh

• Ener,,y Purchase Agreement with the power Purchaser

• Implementation Agreement with the Government of Pakistan

• Government of Pakistan Guarantee• Site sub -Lease Agreement

18


Policy for Development of Renewable Energy for Power

Generation 2006

Major Tasks Completed

3 Executed EPC 3 . Executed term 3 Environmental

& ( ► &NI sheet with Project impactagreements lenders assessment

3 Pea;ibility 3 Wind Resource 3 TopographicalStudy Assessment Study Study

3 Transportation 3 Geo-technical 3 Electrical gridStudy Study study

3 Design of wind farm

^^ ^^_ ] 19


3.3 KEY FEATURES OF THE PROJECT

Amongst various other factors, the foilowing are the key strengths of the Project:

(a) Sapphire Wind Power Company Limited initiated an international competitive

bidding process to select the EPC Contractor for carrying out the construction ofthe proposed 50 1\RV Wind Farin. A Request for Proposal (RFP) stating all thetechnical and commercial requirements for a state of the art wind farm in Pakistan was

floated to Six world renowned WTG Manufacturers to bid for the development of

the project on a turnkey basis. \fter detailed evaluation of the Technical Bids

submitted by the bidders, as per International. Bids Evaluation Standard of two-

envelope process , only those bids were selected for financial and commercialevaluation that passed the technical requirements of the RFP. After an extensiveprocurement process CMEC/GE emerged as the most responsive contractor with the

most bankable commercial package.

(b) Executed EPC with CMEC and GE respectively as the Turbine supplier: Based

on the international competitive bidding process followed by an intense due diligence,

CHINA 1\-1:\CI IINi RY ENC;INNNRIN(: CORY( )R.\'i to iN ("CMEC") was selected as the

preferred bidder with GI{NuR.\t. EI.I?Critic ("GE") as the Wind Turbine Generator

(\\TG) suppler to undertake the project on a turnkey EPC basis. A consortium

between General Electric International Operations Pakistan (Private) Ltd and General

Electric International Inc was selected for provision of the O&1\I services. Definitive,

legally binding, fixed price, non-escalable EPC Agreements were signed between the

parties on August 27th, 2011.

General Electric ranks as one of the world's leathns wind turbine suppliers boasting aproduct portfolio of %%.nd turbines with rated capacities ranging from 1 .5 M\\' - 4.I

\f\\ and support services extenditiL,, from d evelopment assiat ancc t o operation and

maintenance . In addition, CNIFC pt .ssesses a market edge in export of complete hydroand thermal plants (.111d equipment and cons tru cuon of a wide variet y of engineeringprojects.

(c) Executed operations and maintenance (the O& M) agreements with world classoperators (General Electric): Considering that General Electric is the wind turbineOEM for the project and one of the leading wind power O&M companies in theworld, the Project Company has contracted the operations and maintenance of theFacility to General Electric by: (i! appointing General Electric as the designatedsubcontractor to care' out the O&.M of the Facility during the first 2 years ofcommercial operations; and (u) directly appointing General Electric as its contractorfor the O&A1 of the Facility from \'e:irs 3 to 10 following commercial operations date.

(d) State-of-the-art Wind Turbine - GE 1.5 XLE: The design used by the GE 1.5xle\VTG is aimed at achieving high safety and environment controls. Moreover, as perthe project Company's analyses, the equipment is suited to the conditions at theProject's Site.

The GE 1.5xle \XTG is part of General Electric 's 1.5 M\V series of \X'TGs. The 1.5M\V series is General Electric 's most widely deployed wind turbine i.e. more than16,51)1) \VTGs installed globally and is known for its:

0J 1) 20


(e)

()

(g)

• conformance and compliance to the International Electrotechnical Commission

(the IEC) standards;

• high availability in a variety of wind classes; and

sharing of components that en<ures consistent workhorse reliability, ease ofmaintenance planning and high commonality in spare parts.

Reliable and Efficient Electrical Balance of Plant : The Sponsors have demandedof the EPC Contractors to ensure the highest levels of workmanship and compliance

with the most stringent of standards employed internationally for development ofwind power projects in development of the Project so as to ensure that the Project isnot subject to any operational issues during the life of the Project. In this regard,

CI\MEC has agreed to procure the electrical balance of plant equipment from one ofthe leading European electrical equipment manufacturers ie. ABB, Ariva or Siemens.

With the reliability of European electrical balance of plant equipment and state of theart wind turbine technology from one of the leading \t'TC manufacturer, the Projecthas significant advantage in terms of technology and equipment of the plant.

Reputable sponsor with unwavering commitment to wind energy : The SapphireGroup (the Group) is one of the largest textile groups in Pakistan with a businesshistory of more than four decades. The Groups' core business is textiles and covers

the complete textile value chain. In Fact, Sapphire is the only Pakistani group to have a

presence in all textile sectors, comprising knitted apparels, woven apparels and hometextiles. The Group has a total of twenty-rvo manufacturing facilities in Pakistanemployin,t more than I4J)i)1i people

Slnnhtre has a!read, t,IIli eci two the enertnv sector by establislur g a 225 Itlll''thermal power plant using GE' turi'ines . The project has been developed as a jointventure with DAG Bank, German,.,and a hhddle Eastern investment house. Thepower plant achieved COD in the Ialt quarter of 2009 and is in operation since then.

Strong Project Team : The Project Company is advised by leading consultants as

Project advisors who have played it key role in the development of wind energy in

Pakistan. The Project advisors are presently also advising various stakeholders in otherWind IPPs and are playing a pivotal role in the consummation of some of theupcoming projects in the industry.

Technical Consultant - SgurrEnergy is a leading independent multi-disciplinaryengineering consultancy specializing in renewable energy. SgurrEnergy has thecapability to deliver at every phase of a project, from the early stages of site selection,feasibility and design right through to project management of the construction phaseand operation and maintenance. Their highly qualified team of over 100 consultantshas extensive UK and international experience providing consultancy services across 6

continents in over 30 countries. To date Sgurrlnergy has assessed over 40,000MW ofrenewable energy development internationally and this figure is growing rapidly every

month.

Legal Consultant - Rizi, Issa, Afridi & Angel has been selected to provide legal

support on all aspects of the Project including Project documentation, regulation and

Financing matters. Rizi, Issa, Afridi & Angel has been actively involved in power sector

^^ ? 1 21


projects and has advised various project companies / sponsors, lenders and theGovernment of Pakistan on various transactions and matters.

Financial Consultant - The Project Company has chosen Bridge Factor as their

Financial consultant for the Project. Bridge Factor provides capital & financial

solutions to companies across a diverse range of industries and has a specialized team

with particular strengths in corporate strategy, capital restructuring, corporate finance,divestments, and mergers and acquisitions. Bridge Factor has in depth knowledge ofthe local power sector and has been working with wind power projects in Pakistan forthe last 5 years. They have also assisted various thermal power projects in achievingfinancial close.

!t '? 22


4. RATIONALE FOR WIND POWER

4.1 RATIONALE FOR WIND POWER

4.2 PAKISTAN'S CURRENT ELECTRIC POWER SHORTAGE

TARIFF PETITION

Pakistan currently has 21.593 G\V of installed capacity for electricity generation.

Conventional thermal plants (oil, natural gas, coal) account for 67.5% of Pakistan's

capacity, with hydroelectricity making up 30.36% and nuclear 2.14%.

Pakistani government estimates that by 21)14, Pakistan will have to increase its

generating capacity by more than 5ii% to meet the increasing demand. Pakistan's huge

energy crisis is jeopardizing its economic progress and social development. The majorreasons for the energy crises are the lack of investment in Power Sector, non

development of renewable energy sector i.e. Hyde], Wind & Solar etc and thedepleting Oil & Gas reserves. It is imperative for Pakistan to look forindigenous/cheap energy resources for sustainable growth through self-reliance.

One of the utilizable resources in the short term is wind power generation. Although itis a new technology in Pakistan, it has a proven track record globally and is recognizedas a commercially viable technology. With over 150,000 N RV installed capacity around

the globe and over 36,000 M\\' of installed capacity in India and China alone, the casefor development of wind energy in Pakistan is very strong.

4.3 WIND POWER PROJECTS -A NATURAL CHOICE

T o ensure a sustainab le e..errY ,' funtui-c for PakistanIt is necessary that hea., i„ energy sector

be accorded a high priority. It is considered that wind power generation could become,_a ;i);,)ic„_̂ .,,;i contributor to 1'akis,an's electricity supply in the near future. The

development of wind generation pre ejects supports the environmental objectives of the

Government of Pakistan by,:

(a) reducing dependence on fos'il fuels for thermal power generation;

(b) increasing diversity in Pakist.n's electricity generation mix;

(c) reducing green house gas emissions through the avoidance of thermal powergeneration; and

(d) helping in reduction of the exorbitant trade deficit.

4.4 THE WIND POWER GENERATION POTENTIAL & GOVERNMENT OF

PAKISTAN'S SUPPORT

The wind power generation program in Pakistan was initiated around five years ago byinstallation of wind measuring stations in the coastal areas of Sindh, Pakistan. Theenergy potential of 346,000 MV(' in the country is estimated by National Renewable

Energy Laboratory, USA and onl', the Gharo - KetiBander - Hyderabad wind

corridor (the \Vind Corridor) has a potential of 50,000 MW of wind power generation.

If harnessed adeciuately, wind enerpy alone would eradicate energy shortages in the

country. The Government of Pakist.tn is currently looking to build wind farms in the

(fi(I 1) 23L) 0


\\'ind Corridor, some of which : re regions where electricity supply through the

national grid has been a challenge.

The Government of Pakistan has clearly articulated its support for the development of

renewable energies. Due to the fact that wind energy is one of the most economical

and efficient of renewable energy production techniques, the focus is on supporting

the development of wind farms through independent power producers ( the Wind

IPPs).

4.5 WORLD CLASS EPC CONTRACTOR; FIRM EPC COST AND FIXED

COMMERCIAL OPERATIONS DATE

4.5.1 EPC Contractor Selection - The International Competitive Bidding

Process

S\XTCL adopted International Competitive Bidding to select the Contractor for the

Project. The objective of International Competitive Bidding was to provide all eligible

prospective bidders with timely and adequate notification of the S\X'PCL's

requirements and equal opportunity to bid for the required works and select the EPC

Contractor that offered the best I:PC: solution at the least price.

In compliance with the high standards of Procurement procedure, SWPCL

implemented a one stage bidding process, where only bids that passed technical

requirements were selected for financial and commercial evaluation. A detailed and

comprehensive Request for Propo^:l ("RFP") was developed The u Fn c ,, Stiiutcs

tec hnical requirement; of a state of the art \\'ind Farm to compliance w ith

International and Pakistani sta,^.Itr;'; Sgur. r-.>^eirr,r.ner,r<, UK, who are Renewable Energy

specialists, developed the technical RFP. A standard Turnkey EPC Contract was also

developed by Legal Counsel (Rirvi, Issa, Angel, Afridi & Co.) and Financial

Consultants (Bridge Factor) stating legal and commercial requirements of the Project

Company.

S%^ TCL engaged in a lengthy and time-consuming process for the development of

detailed RFPs and only those bidders, which complied with RFPs, were selected for

financial and commercial evaluation . This process adopted by Sapphire is consistent

with International Competitive Bidding (ICB), one stage bidding process.

Six internationally renowned Wind Turbine Generator (\WWTG) manufacturers

interested in providing EPC turnkey solution in Pakistan were shortlisted to

participate in the bidding process. These bidders included:

1. Vestas;

2. Siemens;

3. Nordex;

4. Siemens;

5. Goldwind;

6. Alswaedv Electric (SWEG); and

7. General Electric

2403 'r


Due to S\V T'CL's efforts and resources employed on the Project, a bid bond of US$

500,000 was requested from all the bidders to participate in the bids, to ensure that

only the serious bidders bid for the project.

A detailed and long diligence process of evaluation of all the bids was carried out to

select the most responsive bid. The criteria for selection of contractor was divided into

two sections i.e 'T'echnology and Commercial. The Technology and Commercial

Selection criteria used to evaluate the bids was as follows

4.5.1.1 Technology Selection Criteria

A range of technologies were offered to S\VPCL in the bids, which included, inter alia,

from I N RV to 2.5 Megawatt \VTGs, synchronous or asynchronous generators and

geared or gearless \X'TGs. SgurrEnergy, evaluated all the technologies offered taking

into account the following factors;

(a) equipment to be of latest technology , megawatt class and high efficiency;

(b) compliance of the proposed \X'TG with local wind conditions in Pakistan,

(c) reluctance of various \\'TG <uppliers to participare in projects in Pakistan;

(d) references and experiences of the wind turbine manufacturers under similar

environmental conditions (e.-,. temperature, wind farm size; area);

(e) sufficient track record of the turbine type:

(f) commitment to the market: ,villingness to commit to Pakistan market;

(g)

(e)

energy output with warranted power curve and performance warranty;

grid compatibility;

(1) delivery time i .e lead time and conditions to be fulfilled in order to have the

agreed delivery time started; ind

(i) suitability of operation and maintenance concept for the size and location of

projects with suitable avaiiabiliry of spare parts , consumables and main

components.

4.5.1.2 Commercial Selection Criteria

The process adopted for evaluation of the Commercial Bids included:

(a) An in-depth review of the commercial terms submitted by each bidder to

ascertain their financial and commercial implications on the overall project

13 c- 25'35


(b) Comprehensive comparison of the commercial aspects of the bids submitted;

(c) Comparison and correlation between the bids submitted earlier with the

revised bids;

(d) Division of commercial terms into subcategories with each being allocated

points (further sub-divided into q,ialitative and quantitative) based on their

relative importance to the o%-erall commercial viability of the project; and

Application of a relative marking system through which the highest marks wereawarded to the most compliant bidder and the remaining bidders were allocated marksrelative to the highest bidder.

4.5.2 The Selected EPC Contractor - (_I IIN:t M.\CI TIN(?R)'ENGINF.F.RINCG CORPORA'T'ION

After an intense proposal evaluation and thorough due diligence process, with an

objective of bringing a world class tad bankable turn-key EPC solution to Pakistan's

wind sector, China Machinery Engineering Corporation ("CMEC") was finally

selected as the EPC contractor with GE Energ ("GE") as the Turbine supplier for

the Project.

4.5.3 'The Selected Technolot?y

MANUFACTURER General Electric

'IND TURBINE GENERATOR AGE 1.5 xir

,Br.T'!v̂ ilEiiriT ;80 meters

UMBER OF TURBINES 33

TOTAL INSTALLED CAPACITY 49.5 t'JW

The GE 1.5xIe \VTG is part of General Electric's 1.5 MW series of \X'TGs. The 1.5

M\X' series is General Electric's m,,st widely deployed wind turbine i.e. more than16,500 \VTGs installed globally and is in conformance and compliance to theInternational Electro technical Comnussion (the IEC) standards.

4.5.4 CMEC - Introduction

China machinery Engineering Corporation (CMEC) was established in 1978, as thefirst large national corporation integrating foreign trade with industry , CMEC is a largeglobal conglomerate with the engineering contracting as its core business and its main

business includes import and export trade, R & D work and design as well the

international service.

As a well-known international engineering contractor, CMEC ranked 3rd among the

top fifty China's enterprises listed by the Ministry of Commerce of China in terms of

the business turnover completed in foreign engineering contracting in 2008.

260j0 f ►


Engineering News-Record, a famo.ls magazine in the United States, has listed ChfEC

among the largest 225 contractors i:l the world for several consecutive years.

CAIEC has expertise in international engineering contracting , complete plant export,

import and export of electromechanical products and is ranked among the leading

contractor particularly in turnkey contracts for the international power engineering and

large infrastructure projects.

4.5.4.1 Extensive Experience in International Contracting In Power Sector

In the 1980's, Cb1EC successfully exported the first set of 210M\V thermal power

plant using seller's credit. In the 1990's, CNIEC completed over 320MW thermal

power generating units in the international market. 4 sets of 30MW hydropower units

were contracted in Africa. The combined cycle power plant of first dual-fuel 6FA gas

turbine units was contracted by CM CC, which was first of its kind in the world. Power

stations with 600MW sub-critical coal-fired generating sets and 600MW sub-critical

lignite generating sets were exported to the international market.

4.5.4.2 CMEC - International Markets Expertise

CMEC is engaged in the business of acting as :Hain contractor of the international

engineering contracting and the export of complete plant. Its business scope covers

over 120 countries in five continents worldwide. The business sectors CMEC is

involve in include power generation, transmission and transformation, light industry,

textiles too 1 11''AAin -g malerialg co MuniL xuCu, railway, harbour,

telecommunication, broadcasting and TV, shin-building metallurgy and boiling.

With 23 wholly-owned and holdine subsidiary companies in China, 11 wholly-owned

and holding companies and 11 representative offices based in other countries of theworld, Ch1EC has grown and developed into a comprehensive enterprise group linkedwith property ownerships , pillared by foreign trade and integrated as one entity withtrade, industry, science , technology and services.

4.5.4.3 CMEC - Quality

CMMEC has DIN ISO 9001 certification covering the planning, supply , constructionand start - up of all electrical and automated systems as well as infrastructural activities

related to wind energy systems and wind farms . CMMEC follows its corporate ideal of

"Create ideas achieve dreams" and "to improve people's quality of life" as social

responsibility , continuing commitment to mutual benefit and common development,

harmony and progress . Adhering to the corporate culture of "people-oriented,innovation, competition, cooperation , integrity, dedication , harmony", and strive to

become an international project contracting , international trade and related services in

the forefront in China and of world- renowned international enterprise group.

27


4.5.5 GENERAL ELECTRIC

TARIFF PETITION

General Electric is among the world's leading suppliers of power generation

technologies including coal, oil, nuclear energy, natural gas and renewable sources suchas water, wind, solar, geothermal and alternative fuels. With over 13,500 wind and

3,600 hydro turbines, their installed capacity of renewable energy exceeds 160,000M W. Building on a strong power generation heritage and spanning more than a

century, General Electric wind turbines have delivered proven performance,

availability and reliability.

As one of the world's leading wind turbine suppliers, GE Energy's current product

portfolio includes wind turbines wiih rated capacities ranging from 1.5 Nf\Y! - 4.1 NfWand support services extending from development assistance to operation and

maintenance.

4.5.6 WORLD CLASS O&M CONTRACTOR

Considering that GE is the manufacturer of the \VTGs, the operation and

maintenance (the O&M) of the Facility has also been contracted to GE (the O&M

Contractor). GE in its global structure for providing O&M services has allocate.±

Pakistani W ind Energy Market to its West European Region and has committed to

provide state of the art O&M services from its East European regional head of Paris.

GE in its commitment to the Pakistani Wind Energy Market, has signed an O&M

Agreement for tens years. The 0&-%I Contractor has, as part of its obligations under

the C1&M Agreement, guaranteed the performance of the ; c^...Lt for the contracred

period, thus minimizing the techiucal operational risk of the Project. The O&i\1

Agreement covers minimum performance standards of the Facilirv and provides a

complete turn-key O&NI solution ff ^r the Project.

4.6 THE SITE

The Project will be located at Jhampir , District Thatta , Province of Sindh (the Site) inthe Wind Corridor. The Wind Corridor is identified by the AEDB as a resource of

high wind regimes with a potential of wind power generation of more than of 43,000

M\Y'. This area has been extensively surveyed and is identified as having strong

potential for sites of several wind farms.

In view of Sapphire's commitment to the Project, AEDB handed over Sapphire the

physical possession of Site on April 2(108, as evidenced through the document dated

April 5, 2008 executed between AEDB and Sapphire.

The Site for the Project is located in the south-eastern part of Pakistan between

Hyderabad and Karachi, approximately 100 km inland from the coast in a semi-desert

area with rare vegetation. The nearest settlements are Jhampir (2.5 km southeast) and

Nooriabad (22 km north-west). The Site itself is mostly flat with a wadi along the

northern boundary line of the Project Company's development area and a low dune

crossing it in the western part.

0 ^g

I,

SAPPHIRE WIND POWER COMPANY LIMITE D TARIFF PETITION

The Site area is a merely wide plain between the river Indus and a more hilly region

westward . There is only sparse vegetation except on irrigated land. Some detached

houses or hamlets are scattered over the more fertile areas . The only greater

settlements nearby the Site are Notiriabad and Jhampir.

Access from Port Qasim and Karachi port to the wind farm Site is possible through

the Super I lighway. A 20 km lon:J, access road links the Super highway to the Site.

.Additionally, main railway track passes closely t:, the wind farm with Jhampir Railway

station only 2 Kin away from the Site.

T! e foi!o t,,g m ;' ;• ;iii lmpres,ion of the area.

Figure 1.3: Location of the WF Site marked as WF FFC

2903 "1


4.7 ESTIMATED OUTPUT

TARIFF PETITION

In line with AEDB's guidelines, S\\ PCL's technical consultant M/s Sgurr Energy UK

(one of the world's leading consultant on wind energy technology) carried out detailed

evaluations to estimate the energy production for the Project, based on:

(a) the selected GE %X'TG;

(b) the Site conditions; and

(c) micrositing.

The summary of the results is as follows:

MANUFACTURER General Electric

WIND TURBINE GENERATOR GE 1.5 xle

HUB HEIGHT 80 meters

UMBER OF TURBINES 33

TOTAL INSTALLED CAPACITY 49.5 I\1\\'

ESTIMATED ANNUAL ENERGI

PRODUCTION (NET) PER ANNUM

Year 1 - 138.8 G\X`h

Year 2 - '?U - 140.9 GVi:

CAPACITY FACTOR 32. °, i)

It is pertinent to mention here that Airing the first year after COD, the wind turbines

require frequent maintenance / tune up, / trouble shooting. This is a common

phenomenon experienced with wind turbines worldwide. Taking into account the

enhanced outages of the wind turbines, the energy production estimate for the first

year of operation is 138.8 G\X'h, which has been used to determine the tariff for the

first operating year.

4.8 PROIECT COST AND CAPITAL STRUCTURE

Based on the assumptions contained in this Tariff Petition and in light of theproposed discussion contained in Scction 5 (Project Cost & Inr'eslmen/), the proposedProject cost is USD 128.8 (United states Dollars One Hundred Twenty Eight pointEight million Only) ( the Project Cost).

The planned financing of the project Cost is by:

(a) 25°% equity (the Equity); and

(a) 75"-% debt (the Debt).

«t fl 30


4.9 REFERENCE GENERATION TARIFF

TARIFF PETITION

In accordance With NEPRA's determination of tariffs for other Wind IPPs, the

Reference Generation Tariff has all the required charges.

The Reference Generation Tariff, as approved by NEPRA, will be integrated into the

EPA. The Project Company hereby respectfully requests NEPRA to kindly ensure

consistency between the adjustment formulae and indexations to be applied to the

Reference Generation Tariff normally conveyed to the petitioner in NEPRA's tariff

determination order since these formulce and indexation will also form part of

Schedule I to the EPA. Consistency must therefore be maintained, as requested,

between NEPRA's tariff determination order and Schedule 1 to the EPA.

4.10 CLEAN DEVELOPMENT MECHANISM (CDM) ASPECT

Section 8.3.3 of the RE Policy 2006 states:

...all qua/ inQ Renewable Energy (lbe RE) project shall be eligible forfnancirt^ tinder the Clean

Development Nlecbanisna (C-DA1) and will be encouraged to register for Cerl fed Emission Reduction

(CER) credits with the CD 11 Executive hoard, either co/%clirely or individtta/!y.

7/,e Cot entment shall' a/so stave, in co/lar'oration uilb international deve/opment agencies and to the

extent possible, to_ facilitate project applrca<'ons for such carbon rredils in order to reduce the associated

initial transaction costs /or project sponsor. Importantly, as this policy creates sign icant incremental

costs for the RF power,purchaser (hither !arch.. resource availubil. ; ks, backrrr dower provi.rinn,and iii/en UrrlleCflolt ttlt. rartnr^;;• f l..!r4nSr^sr/o;t . .^, t, tr ucrJ7i[rr aj)propriute that any carbon credits

thus obtained by RE 11T., be utt/i ed ,r party ol/ret th burdn so as to Lwpr^•c the ecoilor/l:itt,

:wspetrlireness of RE based yni /power /or both the rate payers and the producers... "'L

1:'hile it appears possible that the Project may be able to realize monetary gains from

t uch carbon credit schemes, the actual timing, amount, and other details of the

outcome are quite uncertain at this point. It is thus proposed that the ReferenceGeneration Tariff for the Project he approved irrespective of the outcome of thecarbon credits.

However, if any CER related revenues are realized , it is submitted that they will beshared as per the policy of the Government of Pakistan.

l' 31


5. PROJECT COST AND TARIFF

5.1 PROTECT COST SUMMARY

The total Project Cost, expressed in United States Dollars, has been calculated after

thorough analysis, evaluation and understanding of the dynamics that affect the

development and operation of a wind farm. The reference exchange rates used to

convert the relevant costs into United States Dollars are USD 1 = PKR 86.2.

5.1.1 For NEPRA's benefit and approval, a summary of the Project Cost is given below:

5.1 DETAILS OF PROJECT COST

5.1.1 EPC COST

Breakup of costs associated with each Contract forming part of the turn-key EPCentered into by the Project Company is provided below:

() z1 12


Note:(a) the turnkey price being charged by the EPC Contractor for the Project is based

on firm legally binding offshore equipment supply and onshore constructionservices agreements (the EPC Agreements) executed between the Project

Company and the EPC Contractor; and(b) the L/C confirmation charges to be incurred on the amounts payable to

CMEC under the EPC Agreements.

The requirement to have the L/C confirmed through an international bank has

specifically been requested by CtIEC taking into account the recent credit ratings

assigned to Pakistan by Standard & Poors and Moodys.

The Offshore Cost represents the cost of 33 (Thirty Three) GE 1.5 xle \VTGs, 99

(Ninety Nine) GE 1.5 xle blades (82.5 m dia.), electrical equipment, together withancillary equipment and other goods, systems and machinery and includes the cost of,inter alia, the erection , testing, completion and commissioning of the equipment andconstruction of the Facility that is c.ipable of fulfilling the intended purpose.

It is highlighted that the Sponsors have demanded of the EPC Contractors to ensurethe highest levels of workmanship and compliance with the most stringent of

standards employed intematidnally for development of wind power projects indevelopment of the Project so as to ensure that the Project is not subject to anyoperational issues during the He of the Project.

The EPC Contractor, in order to comply with the Sponsors requirements selected

various manufacturers based out of Europe for procurement of all equipment relating

to electrical balance of plant. The I:PC Contractor option to procure equipment frothEurope as opposed to Its Sun,]" Ire.: ;; 'heir m C__... h'.'t-t ., an I.«wrir,^ factuues j vendors in Clung

was motivated simply to ensure.tliai the equipment meets the highest bench"-'...:s set

by the international wind industry.

The Project Company is contractually committed to pay mobilization advance of 25"uof the total EPC Price on achievement of Financial close.

5.2 NON - EPC COST

The Non EPC Cost includes the cost of items that are not part of the EPCContractor 's scope of work pursuant to the executed EPC Agreement. Such costsmainly include, inter alia, the costs of

n( 33

O`/t.


(b)

(a) Fixed Assets

TARIFF PETITION

T his includes cosi of various instruments , equipment and other assets (excluding

such assets that are supplied under the EPC Contract) and comprises of:

• Vehicles, Office Equipment, Furniture, Electrical Appliances; and

• Facility connectivity for remote monitoring

Project Administration Cost

Administration cost at the site office during construction includes the

accommodation and living expenses comprising the utility of the O&M staff,vehicle maintenance and running expenses, broadband connection, Personnelprotection equipment at the site etc.

The S\VPCL's head office expenses are also included in the cost as the head officeis required to maintain coordination with the Project Company 's Lenders,shareholders and various governmental agencies and shall work during the wholeprocess including determination of tariff, signing of EPA / LA and other Projectdevelopment activities. _

(c) Cost of Accommodation

This portion of the Non EPC Cost includes costs associated with rent, utilities,

equipment inspection, vehicles fuel & maintenance, and other allied expenses

during the construction period

Accommodation cost also includes the construction cost of a residential facility

for providing housing to the 0,11,1M staff. A 'fit for purpose' residential facility has

been planned at Project site toy accommodate necessary staff. The facility is not

intended to cater for the families of the operating staff.

(d) Cost of Security Arrangement

Pakistan is going through a tough time with respect to security situation in thecountry. This is one of the major impediments in attracting foreign investments.The Project Company is also concerned about the security of its personnel.Therefore, security arrangement costs become one of the most importantcomponents of the Project cost. This represents the costs associated withproviding security at offices, accommodation and site. It is highlighted that in viewof the present security situation in Pakistan, the provision of security by the

Project Company is considered critical. The Project Company has hired the

services of a dedicated Securit - Manager to oversee and monitor the securityrelated matters along with other security staff.

(e) Optic Fiber for Connection with \VAPD A

In accordance with the requirements of the EPA, the Project Company is

required to provide connectivity to the Power Purchaser through fiber optic. The

Y 7 34


total deployment cost (including equipment, materials, and laying of the fiber

optic) has been included under this head.

5.3 PROJECT DEVELOPMENT COST

The Project Development Cost includes the costs incurred for the purpose of Projectdevelopment and includes all costs, fees and expenses incurred or to be incurred forsuch purpose. These costs include, inter alia, costs of feasibility studies, topographical

survey of land, preliminary geotechnical investigation of land, Grid Interconnection

Studies; fees of consultants; costs related to the performance guarantee to be furnished

to AEDB; costs related to the Power purchaser letter of credit to be furnished to thePower Purchaser pursuant to the provisions of the EPA; various regulatory fees to bepaid to NEPRA; costs incurred dw ing Project Company formation; and costs relating

to various permits for the Project.

S\1PCL has engaged highly reputed and leading consultants as Project advisors thathave unmatched expertise in planning, engineering , financial , legal and technicalmatters. Considering that the Project will be one of the first \Vind IPPs to be set up inPakistan, Sapphire has endeavored to put together the best team of consultants for theProject to ensure that wind power sector in the country is developed. ':nd the Project isbankable from all aspects.

5.4 LAND COST

Land cost has been incorporated lit this petition as the Project Company has leased1,372 acres of land of the Project from AEDB together with stamp duty, registrationfees and costs of survey and demarcttion of the land for the Project, which has alreadybeen paid to AEDB.

I r-l.! tt ,1l 35


5.5 TAXES & CUSTOM DUTY

(a) Custom Duty

Rules regarding customs duty on renewable energy projects are driven based on

the information provided under the RE Policy, Guidelines for Determination of

Tariff for Wind Power Generation 2006 ( the Guidelines) and the Government of

Pakistan, Federal Board of Revenue Statutory Regulatory Order (SRO) No.

575(1)/2006 dated June 05, 200('.

Following table highlights and summarizes the fiscal incentives/exemption

available to renewable energy based power Projects regarding customs duty:

Fiscal Incentives / Exemptions on RE Based Power Projects

0Extract from Para8.6.1

No customs duty orsales tax for machineryequipment and spares

(including constructionmachinery, equipmentand specialized vehiclesimported on temporarybasis) meant for initialinstallation or for

balancing,rnodernizauo11,

maintenance,replacement, or

expansion after

commissioning of

Projects for powergeneration utilizingrenewable energyresources (specifically,small hydro, wind, andsolar), subject tofulfillment ofconditions under therelevant SRO

Extract from FiscalRegime

Customs duty at therate of 5% on theimport of plant and

equipment notman.ifacrured locally

Extract from Para 11 (5%customs duty)

Machinery, equipment and

spares meant for initial

installation, balancing,

modernization, replacement

or expansion of Projects for

power generation through

oil, gas, coal, wind and wave

energy including under

Construction Projects which

entered into an

implementation agreement

with the Government of

Pakistan

Para 13 (0% customs duty)

Machinery, equipment andspares for initial installation,balancing, modernization,replacement or expansion ofProjects for powergeneration through nuclearand renewable energysources like solar, wind,

micro-hydel bio energy,

ocean, waste-to-energy and

hydrogen cell etc.

It transpires from above that the three documents (the Policy, the Guidelines and

the SRO) when read in conjunction gives rise to an ambiguous situation, as thePolicy provides for NIL customs duty, the Guidelines provides for a 5% customs

duty, and whereas the SRO has loth the NIL and 5% customs duty rate.

The Petitioner has assumed (J customs duty regarding imported plant,


(t)

TARIFF PETITION

equipment, machinery etc. in accordance with Para 13 of the SRO read with the

Policy.

However, as the Guidelines and Para 11 of the SRO provide a 5% customs duty

rate, in view of this apparent ambiguity the petitioner prays NEPRA to allowadjustment of capital cost of the Project and the tariff, in each case, for actual

customs duty paid, at COD.

(t)) Special Excise Duty

Special Excise Duty is assumed at 0%, as the same is correlated with the rate of

customs duty (assumed 0"1%). In case the Project has to pay 5% customs duty (inthe event the customs authorities bring the import under the ambit of Para 11 of

the SRO) then the Special Excise Duty at 1°/" is leviable. Accordingly, the

Petitioner prays NEPRA to allow adjustment of capital cost of the Project and thetariff, in each case, for actual customs duty paid, at COD.

(c) Sales Tax

No Sales Tax is assumed on import and local supply of the imported plant,

equipment, and machinery etc., based upon the SRO and recent Notification SRO575(1)/2005 issued by the Government of Pakistan, Federal Board of Revenue.

Furthermore, for the purpose of this tariff petition, the Petitioner has not taken

into account the impact (if any) of the enactment of the Sindh Sales Tax on

Services Act, 2011. As the law has only very recently been enacted, the true

implications and procedures on applicability are not clear at this time. However, incase tut,i., O_u.Siu__v ,te 11grCemen[ forming part of the EPC Agreements (be inggree^^^ents ^cservicesperformed in the province of Sindh) is brought into the ambit of the Sindh SalesTax on Services Act, 2011, it is prayed to NEPRA that the tax charged to theProject be allowed as a pass-through at the time of tariff true-up.

(d) Income Tax

Advance Income Tax @ 0.00°%',% (Zero Percent) has been assumed at the time ofimport of machinery, equipment, goods, spares and materials for the Project.

(e) Sindh Infrastructure Development Surcharge (SIDS)

0.850';x" of the imports for the Project have been assumed as Sindh InfrastructureDevelopment Surcharge (the SIDS). The chargeability of SIDS is based on theweight of the imported equipment / items and the distance of the Site from the

port. Since the imported equipment is expected to be of haulage load and has totravel considerable distance from the port, maximum rate of SIDS has beenassumed in the Project Cost.

Federal Excise Duty (FED)

FED on the payments to be made to (1) local financial institutions; and (2)insurer's has not been assumed. In case FED is levied on the financial advisorsand lead arrangers' fee, debt arrangement fee and commitment fee, L/C

37. J 0't I


commission and charges, loan administration charges, and insurance premium the

same should be treated as pass-through under the tariff.

5.6 PERMANENT WORKING CAPITAL

Inflow of Funds During Operating Period:

Under the terms of the EPA to be executed between the Project Company and the

Power Purchaser, the Project Company shall invoice the Power Purchaser for the

settlement of the Monthly Energy Payment on or after the first day of the month

following the month to which the Monthly Energy Payment relates. The Power

Purchaser has to make the payment of the same by the thirtieth day following the day

of submission of the invoice i.e. 31" clay.

Outflow of Funds & Requirement for Working Capital:

ON The Project Company is required to collect sales tax from the Power Purchaser

on behalf of the Government of Pakistan and deposit the same by the 25"' day

of the month to which it relates. I-Iowever, as explained above, the Power

Purchaser is only obligated to make payment to the Project Company against

the invoice raised within 30 days from the date of invoice - thus creating an

inherent mismatch in the av:lilabihry of cash flows to the Project Company for

settlement of lt; habitiitu2S.

(b l Furthermore, the Project Company would be making payments to the

operations and maintenance contractor monthly 15 days in arrears whereas the

same will be recovered front the Power Purchaser 30 days in arrears - thus

creating a mismatch in cash flows and providing a further justification for

working capital.

(c) The terms of debt financing stipulate repayment of debt on semi-annual basis

commencing from COD. By the time the first repayment is to be made to thelenders, the Project Company would only have received 5 months of revenue

in accordance with the 3t1- day payment terms under the EPA. Thus a

permanent shortfall of 1 /6i1' of the debt installment would be created whichthe Project Company intends to fund through upfront permanent workingcapital; this requirement is sr.fndard in all Financing transactions of this type.

(d) Finally, given the current ecf momic situation in the country and the problem

of circular debt faced by the economy, it is highlighted before NEPRA that the

Power Purchaser is presentlN delayed in making its payments to the IPPs (such

delays amounting to months in aggregate in case of some IPPs), which has

created substantial difficulties for such IPPs and has even caused some of

them to default under their various contractual arrangements. Approval of a

SAPPHIRE WIND POWER COMPANY LIMITED TARIFF PETITIOPJ

WY 'orking Capital in the "1 otal Project Cost by NEPRA for the Project

Company will not only help the Project Company in management of its cash

flows but will also reduce its default risks emanating from the considerable lags

in the receipt of payments from the Power Purchaser.

In consideration of NEPRA's views on commercial working capital lines, which have

been disallowed to earlier projects, it is submitted that such permanent working capital

be allowed to be injected upfront by the Project Company, in replacement of a

revolving credit line from banks

5.7 PRE-COD INSURANCE COST

Pre-COD Insurance Cost covers the insurance cost of Project Company's assetsduring construction and the same are incurred prior to COD. These cost estimateshave been developed based on an offer received from one of the leading insurance

companies in Pakistan.

The Project Company, in view of the prt'ctices set by other IPPs in Pakistan and inaccordance with the requirements sct out f;<< the Lenders funding the Project, intendsto procure the following insurances during the construction phase of the Project:

Construction All Risk Insurtnces (CAR);CAR Delay in Start-up Insurance;Terrorism Insurance;Marine and Inland Transit Insurance;Marine - Dela,-In Startup Insurances; andCoi,rprehensive General Liafnlin-.

The premiums payable under the above stated Pre-COD insurances, does not includethe administrative surcharge, the Federal Insurance Fee and the Federal Excise Duty,in each case, relating to the Pre-C( )D insurances , and the Petitioner prays that thesame be allowed by NEPRA1 as part of the One-Time Adjustments allowed at the timeof COD.

5.8 SINOSURE FEE

Sinosure is China's official export credit insurance agency, offering export credit andcredit insurance. Sinosure insures both China's overseas investments and overseasinvestments into China, and guaranties both investment into debt and equity.

Investment insurance is intended to provide the insured with risk guarantee when theysuffer economic losses because of var, currency exchange ban, requisition, or breachof contract by the government in countries where the insured have made investments.It is designed to support and promote Chinese companies and financial organizations.

According to the requirement of the Chinese government, loans arranged from

Chinese Banks (such as in the case of this Project) are required to be covered under

the Sinosure insurance. Due to the current social and economic scenario prevalent in

Pakistan, the current rate for arrangement of Sinosure insurance for debt is 6.24% ofInternational Commerce Bank of Chine (ICBC) exposure. The fee charged shall be

0 4!} 39


paid upfront and shall provide coverage for the entire term of ICBCs exposure in the

Project.

5.9 FINANCIAL CHARGES

Financial Charges include the costs related to the Debt financing of the Project. Such

costs include, inter alia, the lenders' up-front fee and commitment fee; charges relatedto various letters of credit to be established in favor of various contracting parties(other than L/C confirmation charges for payments to be made to CMEC as these areincluded as part of the EPC Cost;; fees payable and stamp duty applicable on thefinancing documents; agency fee; security trustee fee; Lenders' Project monitoring feeand the fees for the Lenders' various advisors. The financial charges incurred when

foreign financial institutions are involved are on the higher side, however thesefinancial charges have been thoroughly negotiated with the lenders and are in line withthe prevailing market conditions and practices applicable for project financingtransactions.

The term sheets for arrangement of Debt financing signed with the lenders (attachedas Annexure - E) stipulate the costs given below:

The Financial Charges proposed by the project Company for NEPRA's approval arein excess of 3% of the total Debt amount, normally allowed by NEPRA for locallyfinanced project. It is submitted before NEPRA that the Financial Charges cap beenhanced for this project due to the following reasons:

(a) The Project Company understands that NEPRA introduced a FinancialCharges cap of `3% of debt amount' for 200 M\V thermal projects which had

project cost of USD 200 million to USD 300 million. Apart from financialcharges quoted as a percenta,,e (°'o) of the debt/loan amount, all fixed financial

charges (agency, trustee, monitoring, supervisory fee along with Lenders'advisors fee) were distributed over a debt of USD 150 million to USD 225

5 1)40

[;


million, thus resulting in the financial charges being lower than the NEPRA

introduced cap. In the case of wind power projects of 50 MW however, since

the Debt component is much smaller, the cap applied for financial charges by

NEPRA is easily breached and therefore unrealistic;

(b) The Project Company has included a foreign currency loan (i .e. ForeignFinancing) in its capital structure in order to reduce the levelized tariff incomparison to the option of borrowing in local currency only. While the

selection of a mix of Foreign Financing and Local Financing by the ProjectCompany has resulted in the reduction of its levelized Reference GenerationTariff due to a lower cost of Foreign Financing borrowing, it is highlightedthat the arrangement and commitment fees of Foreign Financing issignificantly higher than that of th'r Local Financing (as is the case customarily)and has resulted in higher I'inancial`.Charges. Thus, while considering the low

carrying cost and reduced levelized tariff resulting from the Project Company'sselection of a mix of Local Financing and Foreign Financing, it is submittedthat financial charges should not be capped and should be allowed at actuals,as the Project Company understands that the intention of NEPRA has been toensure the lowest consumer tariff rather than preserving the sanctity of a merecap itself.

(c) Additionally, it is submitted that there is a precedent. available in NEPRA's

determination of financial charges cap for a hydel IPP (i.e. Laraib) where the

financial charges were approved by NEPRA in excess of 3% of the debt

amount.

5.10 INTEREST DURING CONSTRUCTION

Basis for IDC calculations are set out below:

6-MONTFIKJBOR ECO ICBC6-MONTH LIBOR

1

13.38% 0.48% 0.48%3.00% 3.50% 4.00%

- 1.001% 1.00%,

16.38% 4.98% 5.48%

Actual IDC, shall be subject to change depending on the fluctuations in base rate (i.e.

6-month KIBOR & 6-month LIBOR), funding requirement (draw-downs) of theProject during the construction perinnd, changes in Project Cost including changes dueto Taxes and Duties, and variations in PKR / USD exchange rate.

IDC is an cstimatetl^fgu, ,, which is adjkstabk at CDIQ yb,arild w d Ib ,Pm e f id ura n , /awn 4! !,, 4 c htl rr ron jPn d aftKr Ma

NEPR^4 °aIk w urtyiicntfor tht rake a^ 1he triil^a''o/ farii J"'fi

[151

ortfof am.

i^'c*lrtiyed'lhat

41

SAPPHIRE WIND POWER COMPANY LIMIT ED TARIFF PETITION

6. PROJECT FUNDING STRUCTURE (DEBT &EQUITY)

6.1 THE FUNDING ARRANGEMENT

The Project Cost will be funded on the basis of a Debt: Equity ratio of 75:25, thereby

resulting in the following capital structure for the Project:

6.2 DEBT AND EQUITY FINANCING

The envisaged debt : equity structure of the Project is 75:25 implying a total debtrequirement of USD 96,653,672 (based on a project cost of USD 128 .872 million).ICBC and Eco Trade and Development Bank will contribute 87.94 % of the requireddebt (that is USD 85.00 million), while a term sheet for arrangement of the remaining12.06% of long-term debt has been signed with the leading local banks. The estimatedamount to be raised from local lending institution is USD 11.66 Million (approx. PKR1,004 million ). It is pertinent to mention that the debt raised through ICBC and EcoTrade and Development Bank will be denci ninated in USD (repayment in USD,interest payments to be indexed to LIBOR) while debt to be provided by the localbanks will be denominated in PKR (repayment in PKR, interest payments to beindexed to KIBOR). However , regardless of the source of financing (local or foreign),the Project will be financed 100% through Islamic modes of financing.

Based on the current Project cost estimates, the equity required to be injected by theSponsors amounts to USD 32.2 million. The Principles Sponsors, Sapphire Textilemills Limited will inject 100% of the required equity.

6.3 EQUITY PARTICIPANTS / SPONSORS

6.3.1 Sapphire Group

The Sapphire Group (the Group) is one of the largest textile groups in Pakistan with a

business history of more than four decades. The Groups' core business is textiles and

covers the complete textile value chain. In fact, Sapphire is the only Pakistani group to

have a presence in all textile sectors, comprising knitted apparels, woven apparels and

home textiles. The Group has a total of twenty-two manufacturing facilities in

Pakistan employing more than 14,0(u) people.

t,5c: 42


The core businesses of the group are,

• Yarn of various varieties, Woven and Knitted Fabric

• Dyeing and Finishing of Fabric

• Both Woven and Knitted;

• Garment Manufacturing

• Home Textile

• Dairy farming

• Property Development

TARIFF PETITION

The company also places high emphasis on occupational health, safety and protection

of the environment and aims to deN elop fool proof practices that inculcate a culture of

safe thinking and working in all fact-is of their operations.

Currently, products manufactured at Sapphire units are exported to more than thirty-

five destinations across the globe . Sapphire has registered impressive growth in their

turnover and the figure for 2010 exceeded US$ 530 million. This growth has been the

result of excellent planning , employee -centric HR policies , minimizing costs by

developing a transparent operating model and developing alliances with global leaders

in diverse fields.

Sapphire Textile Mills Limited (thc Sponsor or STML), being one of the leading

companies of the Group, has implemented sound business practices based on

principles of good corporate governance with total transparency in all operations.STN [L was incorporated in Pakistan on March 11, 1969 as a public limited companyunder the Companies Act, 1913 (now the Companies Ordinance, 1984). The shares of

STML are listed on Karachi Stock Exchange. The mills, owned and operated by

STML are located at:

• Kotri,

• Nooriabad,

• Feroze Watwan,

• Bhai Pheru, and

• Bhopattain , Lahore.

STML is principally engaged in manufacturing and sale of yarn, fabric, and hometextile products.

Energy Sector

Energy has been identified as a sect )r with high growth potential and action has beeninitiated to enter this field in the first instance.

Sapphire has set up a 225 M'(' thermal power plant using GE turbines. The projecthas been developed as a joint venture with DAG Bank, Germany and a MiddleEastern investment house. The power plant achieved COD in the last quarter of 2009and is in operation since then.

0 5),} 43


Captive Power Plant

The Group also owns and operates generating facilities having a total installed capacity

of 65.3 1\1\V, break-tip (by fuel source) of the same is provided below:

• Furnace Oil - 25.8 MW,

• Gas - 22.2 MVI, and

• Diesel - 17.3 M\V.

6.4 RETURN ON EQUITY

Risk perceptions are high for investments in Pakistan energy sector not only becauseof the security situation of the country but also due to the issue of circular debt.

Another risk perception is that there is no history of wind Projects in Pakistan.

Considering the above it is proposed that an ROE (IRR based) of 18% net of

withholding tax ROE (IRR based) be allowed to the Project Company.

Moreover , in the past NEPRA hay allowed thermal /conventional power producersand hydel power projects an IRR of 15°,'o and 17% respectively ; it is noteworthy thatthe data for hydrology in Pakistan is much more detailed and reliable (having beencollected over several decades) than the data for wind . Further, since the Project isbased on power generation through wind ,. a sector in its infancy in Pakistan, theProject Company is proposing a return on invested equity of 18 % (IRR), net of 7.5%withholding tax on dividends.

The Tariff Standards prescribed under Rule 17 of the Tariff Rules require that thereturn on investment should be "commensurate with other investments of comparablerisk". It is submitted that NEPRA has allowed 17% return to hydel projects where thehydrology risk and unforeseen soil conditions are both well mitigated under the PowerPurchase Agreement and NEPRA's tariff guidelines which permit a "3 stage" tariffprocess permitting a reopening of the tariff parameters. As explained below, the GOPis only covering the wind speed while the investor is taking the risk of other windcharacteristics. Accordingly, investment in the wind sector constitutes a higher riskinvestment in comparison to investments in hydel or thermal power projects, thereby,necessitating a higher risk premium.

The discussion below highlights the salient arguments in favor of allowing 18% ROE(IRR based) to the Petitioner.

6.4.1 Medium Term Policy for Development of Alternative and Renewable Energy

AEDB has already taken notice of the aforementioned situation and has proposed to

the Government of Pakistan, under the draft of the Medium Term Policy forDevelopment of Alternative and Renewable Energy, to increase the return to thesponsors to 18%.

Section 1.13.9.2 of the draft Medium Term Policy for Development of Alternative andRenewable Energy states:

[)7 (, 44


Quote

"the economic, social and environmental benefits of ARE, it is the policy of the Government ofPakistan to provide a rate of return in excess above that of conventional power during the lifetime of

this medium term policy subject to a quot i which rule shall be used in tariff calculations. The A RE

Rate of Return on Equity (ROE) for A RE Projects will be a minimum of 18% (the term ARE'

means Alternative and Renewable Ene)gy'). "

Unquote

6.4.2 Wind Risk

The RE Policy 2006 provided by the Government of Pakistan does not offer complete

immunity to the equity investor against wind risk. The coverage is limited to variations

in wind speed only and it does not take into account other factors, which can affectthe energy output of a wind farm. These factors include, air density, wind frequencydistribution, temperature, and humidity. This limitation in the wind risk coverage canhave a detrimental impact on the IRlt of the equity investor.

6.4.3 Security Issues

Over the last three years the security situation in Pakistan has been quiteunpredictable. The security threats in the country have had an adverse impact both onthe economy and on the cost of doing business in Pakistan. Most of the thermal IPPsbeing constructed under the Powe r Generation Policy 2002 have had to face therepercussions of the deteriorating security situation in one way or the other. Theincreased risk on the capital employed, coupled with the economic uncertainties(circular debt), justify an increase in the required rate of return to 18% (on IRR basis).

6.4.4 Higher ROE for Coal Based Projects

Project Company appreciates the fact that the government is encouragingdevelopment of indigenous resource based power projects. The most recent exampleof such encouragement is issuance of notification # PL-6 (71) / 2010 by the Ministryof Water and Power on March 8"2011 through which a USD based return of Twentypoint Five (20.5) percent (IRR basis) has been guaranteed to indigenous coal projectsachieving financial close by June 2014.

Project Company feels that similar kind of encouragement should be allowed to windIPPs, so that reliance on indigenous resources can be increased. In one of the lastdeterminations carried out by NEPRA for a wind IPP, NEPRA had allowed a returnof 17 percent (on IRR basis).

6.5 RETURN ON EQUITY DURING CONSTRUCTION (ROE DC)

As per the RE Policy 2006, wind IPI's are allowed to claim return during the term of

the Implementation Agreement commencing from the start date of construction i.e.the (late from which payments are made to the EPC Contractors. Therefore, the

^^:1[:^ 45

SAPPHIRE. WIND POWER COMPANY LIMITED TARIFF PETITION

Return on Equity during Construction (ROE DC) will be accrued and shall be

determined at actual at the time of COD based on the actual equity drawdown.

6.6 DEBT SERVICING

Industrial & Commercial Bank of China ("ICBC") and ECO Trade Development

Bank ("ECO") have expressed their intention to contribute 87.94% of the requireddebt (that is USD 85 million), while a consortium of Local Banks have provided anindicative term sheet for arrangement of the remaining 11.06% of long-term debt.

Debt financing to be provided by each of the financial institutions is provided below:

`MILLION USD

ICBC i ' 55.00

ECO ,h

s • ' . ;: 30.00

^r u "'may 11.66

T-07 !:;! 96.66

(a) Foreign Financing terms - IC:BC

YS 6 Month LIBOR

5.1)0% (margin of 4.00% + 1.00% for

ADB REDSIP Guarantee)

RBp' , .s $'; ^^ 20 consecutive semi-annual repayments.n

GRAbWWOD • -i.,. ears

NIBS',', 1.i% of the total Foreign Financingf

SIN . ^i l , Sinosure coverage to cover the Political

risk

ADB P>:''<;.'.' Commercial Risk coverage by ADB

Gv '?»

RI:DSIP Guarantee to tune of 100 bps, )lCO FEE O.i$0% per annum

(^1t^ 46

SAPPHIRE WIND POWER COMPANY LIAIITEI)

(b) Foreign Financing terms - ECO

TARIFF PETITION

$ •. ,t+L: } 6 Month LIBOR

4 . 50% (margin of 3.50% + 1.00% for

INADB REDSIP Guarantee)

.` • '.M3' 21) consecutive semi-annual repayments

CC ) ^

(3 .I,- it 2 years

1.5% of the total Foreign Financing

AD IP '-` `' , `' Commercial Risk coverage by ADB

GU !;;,' REDSIP Guarantee in tune of 100 bps

CO- 0.50% per annum

(c) Local Financing Terms - Local Banks

.BAs 3 Month KIBOR

r•^ Y/U

Ri^>P, ^ ?c 21) consecutive semi-annual repayments

G QA"" ^` 2 years

•.^ y 1

O 'F `• 0?5 % per annum

Pre-COD: USD 23,000 per annum

SE USTft>';'. USD 17,500 per annum

MONITORING FEE` Pre-COD: USD 11,600 per annum

The indicative term sheet for foreign and local financing is attached with the Petitionas Annexure E

6.6.1 Asian Development Bank (REDSIP Guarantee)

In view of the difficulties being faced by Renewable Energy Independent PowerProject developers in arrangement of debt financing for implementation of theirprojects, Asian Development Bank (ADB), in cooperation with the Government ofPakistan (GOP) (through the Alternate Energy Development Board (AEDB)) hasagreed to offer a guarantee facility to interested and eligible REIPPs (RenewableEnergy Independent Power Projects) (the Renewable Energy Development SectorInvestment Program Guarantee Facility, the REDSIP Guarantee Facility).

Under the REDSIP Guarantee Facility, ADB will provide coverage to the REIPPlenders (Lenders), at a nominal fee (Facility Fee), against non-payment by the REIPPsof up to 100% of the scheduled debt service payment (principal plus interest) which issolely a result of non-payment by the National Transmission and Dispatch Company(NTDC) (or any other power purchaser supported by the GOP and acceptable toADB) of amounts due under the IZEIPPs energy purchase agreement (EPA) forenergy delivered or energy that could have been delivered (the Guaranteed Risk).

47

1


As the REDSIP Guarantee Facility can be used to provide coverage against loans

provided by local and / or foreign banks, thereby ensuring that the cash flows required

for making debt service payments are appropriately managed, ECO DevelopmentBank and ICBC require the Project Company to avail the REDSIP Guarantee Facilityas a prerequisite to their financing of the Project. Therefore, in the foreign financingfrom both ECO Development Bank and ICBC, the markup fee for REDSIP

Guarantee Facility is included in the spread markup over the base rate.

Due to the current state of circular debt issue in Pakistan, the Facility Fee forprocuring the REDSIP Guarantee Facility is approximately 100 bps and will beapplicable on the outstanding balance of debt plus accrued interest throughout theterm of the loans.

6.6.2 Reason for using 6 -month LIBOR / KIBOR

The 6-month LIBOR and 6-month KIBOR has been used as the revenues of a WindIPP are dependent on monthly energy produced - as monthly energy is dependent on

the monthly wind speed, which in turn is subject to several variations, i.e. highrevenues during high wind months and low revenue during low wind months. Thedebt servicing capability of the Project is severally hampered due to this variation inrevenue generation capabilities of the Project. The Petitioner has opted for the 6-month LIBOR and 6-month KIBOR, as this would allow the Petitioner to equalizethe monthly cash flows of the Project, for meeting all the cost requirements of theProject.

(I5}, 48

SAPPHIRE WIND POWER COMPANY LIMITEI) TARIFF PETITION

7. OPERATION COST

7.1 UNDERSTANDING & BENCHMARKS

O&M expenses are one of the major unknowns for wind power developers inPakistan. Till date no wind power project has achieved COD in Pakistan. It is

important to note that O&M costs for wind power projects are not as low as

perceived by many in Pakistan. Today's modern wind turbines are built from over8,000 different components. Furthermore, unexpected components failure, especiallyelectronic controls, generators, rotor blades etc. have, over the years, driven upoperations and maintenance costs. This is even more critical in Pakistan where the

high wind seasons is accompanied by high temperature months and the WTGs have

to work at almost full capacity in this extreme weather.

To substantiate the above data; the latest research report on O&M costs "The Wind

Energy Operations & Maintenance Report 2011" states that true O&M costs of thewind industry are clouded in the world due to the fact that the majority of currentlyinstalled wind power capacity is only now coming out of warranty. No manufacturer iswilling to share its actual O&M co,,rs in the warranty periods. To give an idea to theAuthority as per the report 79 percent of the turbines in the world were underwarranty up till June 2009. Therefore, it is difficult to get the real O&M costs for windindustry. The report also suggests that real-time O&M costs are far higher thanoriginally projected in US - which is now one of the largest wind power markets. Thereport also indicates un-predicted component failure of WTGs as one of the keyissues which escalates the O&M costs.

According to the research in the report, O&M costs are, on an annual basis, around 3percent of the total project cost as opposed to the initial estimate of one percent.

In the last 5 years large wind turbines are being developed with lower cut-in windspeed in order to increase their p„wer production and to drive down the cost ofelectricity. This trend in wind turbine size escalation has come with increaseduncertainty regarding O&M activities. The fact that O&M costs for wind powerprojects tend to increase overtime has also been supported by finding recently releasedby the European Wind Energy Association in their report titled: The Economics of itendEnergy.

In view of the foregoing, the O&M costs suggested in the Petition are clearly wellwithin international benchmarks. It is the humble request of the petitioner that theO&M costs presented below may kindly be allowed by NEPRA in order to ensuresmooth, efficient, and effective operation of the Project.

7.2 BREAKUP OF O&M COST

The operations cost of the Project Company comprises of the operations andmaintenance cost and the cost of the operational insurances to be taken out by theProject Company. Break-up of the same is provided hereunder:

49

SAPPHIRE WIND POWER COMPANY LIMITEI) TARIFF PETITION

USD IN THOUSANDS (PER ANNUM )

YEARS 1-2 3-10 11-20

600 2,283 2,283

50 50 50

300 300 300

30 30 30

- - 31

135 135 135

s 50 125 135

75 75 -

75 75 -

1,075 1,075 1,075

2,390 4,147 . 4,039

7.2.1 O&M Cost (Outsourced)

The Project Company is in the final stages of negotiating the O&M Contracts for

which the price and commercial terms have been locked. The contract is expected tobe finalized and executed within a fortnight upon which it will be submitted of theAuthority as evidence of the proposed cost. The O&M arrangement has beenstructured into two separate contracts:

(i) Years 1 - 2 (part of the EI'C) - being submitted along with Petition underseparate cover;

(ii) Years 3 - 10 (O&M Contract) - to be submitted within a fortnight.

The major variation in the O&M Outsourced Costs during the initial two year periodand thereafter is due to the O&M being carried out by the EPC Contractor as part ofits warranty obligations. From the third year onwards the O&M of the Project will becarried out by the O&M Contractor and reflects the contractors expectation ofadditional wear and tear of the part; due to the operations of the turbines and BOPequipment under the prevailing site conditions.

The prices provided above are based on the price agreed with the EPC Contractor andthe O&M Contractor for performance of O&M services for the initial 10-year period.The prices agreed include the costs associated with scheduled maintenance, routinemaintenance, services required for unscheduled maintenance and any spare parts andconsumables required for carrying out the scheduled and routine maintenance.

Upon completion of the 10 year O&M period during which the O&M Contractor willbe responsible for carrying out the O&M activities, the Project Company will carryout

a cost and benefit analysis of carrying out the O&M themselves or again outsourcing

the work to the O&hI contractor. The decision to either carry out the O&M functionin-house or through an external source will depend on a number of factors including

L160 50


(1) level of development of the local wind industry, (ii) availability of critical spare

parts in the secondary market , (iii) presence of skilled manpower in the local market,presence of large cranes able to lift heavy components at heights of over 80 meters

and above , etc. The Project Company optimistically estimates the cost of carrying outor out-sourcing the entire O&M function of the project to cost the same as for theperiod from year 3 to year 10. This estimate is based on the fact that the entire

equipment of the plant including the \\TG's, electrical and civil works would requireconsiderably higher costs to maintain than during the initial 10 years and any saving

from carrying out the O&M in-house (as compared to using an outsourced service)would compensate for the additional costs envisaged during the later life of the plant.

7.2.2 Fixed Assets

The Fixed Asset cost includes costs associated with vehicles required at Site; tools andinspection equipment for inspection of the energy equipment; and furniture andfixtures required for the offices to be maintained at Site, Karachi and Lahore.

7.2.3 Payroll and Allied Expenses

This includes the costs related to salaries and benefits of all staff (administrative andoperational) employed by the Projeci Company at the Site, Karachi and Head Office.

7.2.4 Vehicle Fuel And Maintenance

This component includes costs associated with running and maintenance of vehicles atKarachi and Site office of the Project Company. The vehicles would include vehiclesrequired by the security personnel for securing the site ; vehicles required forsupervision and coordination of O&hM activities, and vehicles required foradministration activities.

The vehicles purchased during the construction period shall be used for the first 10years operation. I1pon commencement of the l0't' year, the old vehicles will bereplaced and the Project Company will procure new vehicles thereby enabling it tomaintain the same level of fuel and maintenance costs for the remainder of theoperations period.

7.2.5 Land Lease Cost Payable AEDB

The lease rentals payable to AEDB for the first 10 years have, in accordance with therequirements laid forth by AEDB aid in advance. These form part of the TotalProject Cost mentioned in Section 5.4 above. In case the lease rentals that have beenpaid in advance (as explained in the preceding sentence) are excluded from the TotalProject Cost by NEPRA while determining the tariff, it is prayed that the same beamortized during the first 10 years of operation in order to ensure that the cost isreimbursed to the Project Company.

Furthermore, at the commencement of the I1'I' year of operation, the Project will be

required to pay (to AEDB) lease rentals for the remaining term of the Project (i.e. 10years) in advance. The cost set out a;,ainst this head is to cater for the cost of the lease

Of 1 51


rentals that will need to be paid to AEDB by the Project for the remaining term. It ispertinent to mention that even though the Project will be required to pay the cost forthe entire 10 year period in advance, the Project Company has accepted that the same

will be settled by the Power purchaser on through monthly energy payments over the

10 year period.

7.2.6 Other Administrative Costs

This portion of the O&M Cost includes costs associated with rents , utilities, traveling,entertainment , audit , legal and financial consultants , technical consultation , generationlicense fees, and other allied expenses of running the offices during operations.

7.2.7 Taxes on Imported Spare Parts

Spare parts required to be imported due to any scheduled or unscheduled maintenance

will be the responsibility of the project Company as agreed under the O&M

agreement.

As per the Government of Pakistan, Federal Board of Revenue Statutory Regulatory

Order (SRO) No. 575(1)/2006 import duty is to be levied on imports by IPPs during

the operations period.

7.2.8 Letter of Credit for Debt Service Reserve Account (DSRA)

Internationally as well as locally, infrastructure projects such as this Project aretypically financed through an arrangement termed as Project Financing. The lendersfor such projects determine the visibility of such projects based upon the projectedcash flows of the project rather than the balance sheets of the project sponsors.Usually, a project financing structure involves a number of equity investors, as well asa syndicate of banks and financial institutions that provide loans for the project. Suchloans are most commonly non-recourse loans, which are secured by the project assetsand paid entirely from project cash flow, rather than from the general assets orcreditworthiness of the project sponsors - a decision in part supported by financialmodeling. The financing is typicall\ secured by all of the project assets , including therevenue-producing contracts. Project lenders are give.-. a lien of, all of these assets andcontracts, and are able to assume control of a project if the project company hasdifficulties complying with the loan terms.

Generally, a special purpose entity the project Company) is created for each project,

thereby shielding other assets owned by a project sponsor from the detrimental effects

of a project failure. As a special purpose entity, the project company has no assets

other than the project. Capital contribution commitments by the owners of the project

company are sometimes necessary to ensure that the project is financially sound.

The mechanism of arrangement of Project Financing, described above, is the theme

behind the Policy developed by the GOP for inviting interest of the private sector

towards power generation. Arrangement of conventional financing would expose the

sponsors to unnecessary risks, as it would provide the lenders an opportunity to obtain

recourse towards other assets of the sponsors.

(f 12 52


The debt to be arranged by the Sponsors of the Project Company is to be structured

as a project financing transaction, under which the cash flows of the Project during the

debt repayment period shall be appropriated based on a waterfall which is usually

applied by lenders i.e. the monthly revenues earned by the Project shall be applied in

the order of precedence specified below:

• Payment of interest and principal due for the month shall be secured by the

Lenders in a Debt Payment Account;

• Payment of maintenance reserve in accordance with the EPA shall be securedby the Lenders in a Maintenance Reserve Account;

• Payments to be made for operating expenditure shall flow through the Project

- the same shall be immediately paid to the relevant creditors i.e. O&M

contractor, staff salaries, etc; and

• The payment against ROE and ROE-DC shall be utilized by the Lenders tofund the Debt Service Reserve Account (DSRA).

DSRA is maintained by the Lenders in Project Financing transactions as a means to

secure the debt service due immediately after the next debt repayment date. The

DSRA provides the Lenders with adequate time to take over the Project in case of

default by the Project Company.

The two options available for funding the DSRA are provided below:

• through cash - there are two further sub-options in case this method offunding is chosen by the Lenders (i) Upfront funding - funding through equityinjection by the Sponsors at the time of COD, or (ii) funding throughdiversion of ROE and ROI;-DC cash flows into a DSRA account. In eitherscenario, the Sponsors of the Project are unable to avail any return on theamount retained by the Lenders to fulfill the DSRA requirement; or

• through L/C the Sponsors provide an L/C equivalent to the amountrequired for funding the L)SRA requirement; L/C charges are borne by theProject Company.

The Sponsors and their Financial Consultants are of the view that the Lenders may be

willing to accept securing the DSI:A through an L/C . The cost associated with the

L/C to be provided to the Lenders for securing the DSRA has been catered for under

this account.

If the cost of such L/C is not allowed to the Project Compay, the same would result in

a reduction of the Sponsors IRR, which defies the basic theme behind the Policy,

that was developed in order to attract private investment into the power sector.

In this regard, the Tariff Standards and Procedures , 1998 (NEPRA Rules), clearly state

that the:

"tariffs should allow Licensees a rate of return which promotes continued

reasonable investment... "

and

t,6,^ 53


"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 comparablerisk "

Furthermore , NEPRA Rules clearly stipulate that the:

"tariffs should, to the extent feasible, reflect the full cost of service to consumer

groups with similar service requirements"

It is therefore, respectfully submitted that the Project Company be allowed to claim

the said L/C charges for fulfilling the DSRA funding requirement of the Lenders

along with the working capital facility (as detailed in Section 5.6 . It is pertinent to

mention that NEPRA has in the pttst allowed projects, for which debt is anticipated to

be funded through various IFI's such as US Exim Bank, IFC, ADB, ECA's, and other

multilaterals and bilaterals the interest charged on working capital facility and DSRA

L/C. The decision of NEPRA in the case of AES Pakistan (Pvt.) Ltd. with regards to

the request by AES for arrangement of working capital facility and DSRA L/C is

reproduced below:

"... The Authority has, however, in the cases of other IPPs who obtained funds

from accredited IFIs and not from commercial banks allowed other Financial

charges such as DSRA L/C charges and agency fees, etc. The Authority, in the

instant case, keeping in view the size of the project and funding required,

understands that the Petitioner will have to obtain funding from IFIs such as

US Exim Bank and IFC, etc. In view thereof, the Authority has decided to

accept the Petitioner's request, subject to provision of verifiable documentary

evidence."

Taking into account the decision taken by NEPRA in the determination awarded to

AES, and the similarity between the AES project and the Project with regards to the

sources of debt funding it is reasonable for the Project Company to request for the

working capital facility and interest cost on DSRA L/C to be allowed to the Project

Company against provision of actual documentary evidence.

Alternatively, the Project shall be f arced to fund the DSRA through cash (on an 75:25

debt: equity basis), which will result in an increase in total project cost of the Project.

This increase in equity will ultimately result in a higher tariff, which will be to the

detriment of the consumers.

7.2.9 Lender Related Costs

Under the financing arrangements the Project Company is required to pay the lendersvarious fees for monitoring and coordinating activities including Agency Fee,Monitoring Fee and Security Trustee Fee which are in line with common marketpractices. Further, due to the im olvement of foreign lenders, an annual technical

review of the Project's operations is mandatory, the cost of which has also beenincluded under this head. All these costs are verifiable from the term sheet signed with

the lenders.

54(11 f '.


7.3 INSURANCE DURING O&M

The Insurance Cost consists of the insurances required under the ImplementationAgreement and the Energy Purchase Agreement coupled with those customarilyrequired for project financing tran ,actions, including all-risk insurance /reinsurance,

business interruption insurance , and machinery break -down, natural calamities,

sabotage and terrorism . A s these risks are an impediment to the smooth and efficient

running of the day - to-day affairs of the Project, it is critical that all risks associatedwith the Project are adequately addressed and all insurable events are catered for in afoolproof manner . Keeping in view the generally adopted global trends and the

magnitude of the Project , a comprehensive operational insurance and reinsurancearrangement is also fundamental to ensure bankability of the Project.

During the operations phase, the Project Company intends to acquire insurance fromone of the leading insurance companies in the country . As it is standard practice forlocal insurers to only retain 5% of the risk and acquire reinsurance for the remaining95% through foreign re -insurer, it is prayed to NEPRA that the insurance costs forthe operations phase be allowed in US Dollars (as has been done in case of all otherpower projects).The requirement to have the operational phase insurance costdenominated in US Dollars is further supported by the fact that the lenders financingthe Project will inevitably require the Project to be insured on replacement cost basis;since a major chunk of the Total Project Cost is already denominated in US Dollars,the replacement cost basis insurance would also need to be taken out in US Dollars. Itis pertinent to highlight , that any replacement costs incurred as a consequence of theoccurrence of an insurable event will also be incurred in US Dollars.

The Project Company, in view of the practices set by the other IPP's in Pakistan andin accordance with the requirement , set out by the Lenders, proposes to procure thefollowing insurance during the operational phase of the Project:

• Property Damage and Comprehensive Machinery Insurance (including BusinessInterruption insurance);

• Third Party Liability;• Terrorism insurance;• Group Personal Accident Insurance; and• Motor Comprehensive Insurance

The insurance cost ( for the operations phase) set out in the petition does not,however, covers the administrative surcharge , Federal Excise Duty and FederalInsurance Fee, that might be applicable on the insurance cost.

(J6`) 55

SAPPHIRE WIND POWER COMPANY 1.IMITEl) TARIFF PETITION

8. PROPOSED REFERENCE GENERATION TARIFF & DEBT

SCHEDULE

8.1 TARIFF CONTROL PERIOD

As the Project is 75 debt funded \t ith loan tenure of 10 years for repayment , this meansthat there will be higher debt service a st requirements in the first 10 years of the Project. Inthe last 10 years of the Project, the t : iriff will be decreased due to no debt service related

costs.

The proposed tariff is for the fife of the Project i.e. length of the EPA, signed with the

Power Purchaser, which is 20 Wears from COD. The tariff is divided into three (03) bands i.e.year 1 - 2, year 3 - 10, and year 11 - 20 to cover the variations due to debt repayment

period, warranty period ()&M, and po,,t-warranty period O&M.

8.2 SUMMARY OF REFERENCE GENERATION TARIFF

A summarized Reference Generation Tariff table setting out the three bands isprovided below (Rs. / kV('h):

YEARS 1-2 3-10 , . ':. 11-20

FIXED O&MFOREIGN 0 .3699 1.3964 1.3970LOCAL 11.4407 0.4833 0.4166

ROE (INCLUDING WHT ON ROE) 4.0110 3.9809 3.9809DEBT SERVICING 8.3031 8.2408 -INSURANCE . . 0.6626 0.6577 0.6577

TOTAL 13.7873 14.7591 6.4522


8.3 REFERENCE GENERATION TARIFF TABLE

TARIFF PETITION

0.3726 0.4440 0.6676 3.7380 0.3031 0.3223 1.1731 1.4784 0.9097 2.6459 1.8359 13.8908 16.11.46

0.3671 0.4374 0.6577 3.6823 0.2986 0.3718 1.1014 1.5298 0.8227 2.7512 1.6638 13.6838 158744

1.3964 0.4833 0.6577 3.6823 0.2986 0435' 10380 1.6070 0.7456 2.9041 1.5109 14.7590 17.1218

1.3964 0.4833 0.6577 3.6823 0.2986 0,5094 09638 1.6880 0.6645 30654 1.3496 14.7590 17.1218

1.3964 0.4833 0.6577 3.6823 02986 0.5963 0.8770 1.7731 0.5794 3.2357 1.1793 14.7590 17.1218

1.3964 0.4833 0.6577 3.6823 0.2986 0.6980 07753 1.8625 0.4900 34154 0.9996 14.7590 17.1218

1.3964 0.4833 0.6577 3.6823 0.2986 08170 0.6563 1.9564 0.3961 36051 0.8098 14.7590 11.1218

1.3964 0.4833 0.6577 3.6823' 0.2986 0.9363 0.5170 2.0550 0.2975 3.8054 0.6096 14.7590 17.1218

1.3964 0.4833 0.6577 3.6823 0.2986 1.1193 0.3539 2.1586 0.1939 4.0168 0.3982 14.7590 171218

1.3964 0.4833 0.6577 3.6823 0.2986 1.3102 0.1631 2.2675 0.0850 4.2399 0.1750 14.7590 1-71218

1.3970 0.4166 0.6577 3.6823 0.2986 - - - - 6.4521 7.4850

1.3970 0.4166 0.6577 3.6823 0.2986 - - - - - - 6.4521 7.4850

1.3970 0.4166 . 0.6577 3.6823 0.2986 - - - - 6.4521 7.4850

1.3970 0.4166 0.6577 3.6823 02986 - - - - - - 6.4521 7.4850

1.3970 0.4166 0.6577 3.6823 02986 - - - - - 6.4521 -.4850

1.3970 0.4166 0.6577 3.6823 0.2986 - - - - - - 6.4521 7.4850

1.3970 0.4166 0.6577 3.6823 0.2986 - - - - 6.4521 7.4850

1.3970 0.4166 0.6577 3.6823 0.2986 - - - - 6.4521 7 4851)

1.3970 0.4166 0.6577 3.6823 0.2986 - - - - - - 6.4521 7.4850

1.3970 0.4166 0.6577 3.6823 0.2986 - - - - - - 6.4521 7.4850

1.1873 0.4561 0 .6587 3.6882 0 .2990 0.4563 0.6094 1.2772 0.4245 2.3322 0.8614 12 .2504 14.2116

57


8.4 DEBT SCHEDULE

8.4.1 FOREIGN DEBT REPAYMENT SCHEDULE - Eco BANK

RepaymentPeriod

PrincipalRepayment

(PKR)

Interest onOutstanding

Debt(PKR)

TARIFF PETITION

TotalInstallment

(PKR)

1 101,340,809 64,394,190 165,734,998

2 103,864,195 61,870,804 165,734,998

3 106,450,413 59,284,585 165,734,998

4 109,101,029 56,633,970 165,734,998

5 111,817,644 53,917,354 165,734,998

6 114,601,904 51,133,095 165,734,998

7 117,455,491 48,279,507 165,734,9988 120,380,133 45,354,866 165,734,998

9 123,377,598 42,357,400 165,734,99810 126,449,700 39,285,298 165,734,998II 129,598,298 36,136,701 165,734,99812 132,825,295 32,909,703 165,734,99813 136,132,645 29,602,353 165,734,99814 139,522,348 26,212,650 165,734,99815 142,996,455 22,738,544 165,734,998

16 146,557,066 19,177,932 165,734.99817 50,206,337 15,528,661 165,734.998

18 153,946,475 11,788,523 165,734,998

19 157,779,742 7,955,256 165,734,998

20 161,708,458 4,026,541 165,734,998

59


8.4.2 FOREIGN DEBT REPAYMENT SCHEDULE - ICBC

RepaymentPeriod

PrincipalRepayment

(PKR)


Debt(PKR)

TARIFF PETITION

TotalInstallment

(PKR)

1 181,142,005 129,893,809 311,035,814

2 186,105,296 124,930,518 311,035,814

3 191,204,581 119,831,233 311,035,814

4 196,443,587 114,592,227 311,035,8145 201,826,141 109,209,673 311,035,8146 20 7,356,177 103,679,637 31 1,035,814

7 213,037,736 97,998,078 311,035,8148 218,874,970 92,160,844 31 1,035,814

9 224,872,145 86,163,669 311,035,814I0 231,033,641 80,002,173 311,035,81411 237,363,963 73,671,851 311,035,81412 243,867,736 67,168,078 311,035,81413 250,549,712 60,486,102 311,035,81414 257,414,774 53,621,040 3111,035,81415 264,467,939 46,567,875 311,035,81416 271,714,360 39,321,454 31 1,035,81417 279,159,334 31,876,480 31 1,035,81418 286,808,299 24,227,515 31 1,035,81419 294,666,847 16,368,967 31 1,035,81420 302,740,718 8,295,096 31 1,035,814

59

SAPPHIRE WIND POWER COMPANY LIMITEI)

8.4.3 LOCAL DEBT REPAYMENT SCHEDULE

RepaymentPeriod

PrincipalRepayment

(PKR)


Debt(PKR)

TARIFF PETITION

TotalInstallment

(PKR)

1 21,498,900 82,291,851 103,790,751

2 23,259,660 80,531,091 103,790,751

3 25,164,626 78,626,125 103,790,7514 27,225,609 76,565,142 103,790,7515 29,455,386 74,335,365 103,790,751

6 31,867,782 71,922,969 103,790,7517 34,477,754 69,312,997 103,790,7518 37,301,482 66,489,269 103,790,7519 40,356,473 63,434,278 103,790,75110 43,661,668 60,129,083 103,790,75111 47,237,559 56,553,192 103,790,75112 51,106,315 52,684,436 103,790,75113 55,291,922 48,498,829 103,790,75114 59,820,331 43,970,421 103,790,75115 64,719,616 39,071,135 103,790,75116 70,020,152 33,770,599 103,790,75117 75,754,803 28,035,948 103,790,75118 81,959,121 21,831,630 103,790,75119 88,671,573 15,119,178 103,790,75120 95,933,775 7,856,976 103,790,751

60


9. INDEXATIONS, ESCALATIONS AND COST ADJUSTMENT

9.1 INDEXATIONS

NEPRA is requested to allow indexation for the various Reference Generation Tariff

components in the following manner.

9.1.1 Fixed O&M (Local) Cost Component

The Reference Local Fixed O&hi Cost Component shall be quarterly indexed to the

WPI of manufacturing in Pakistan , as notified by the Federal Bureau of Statistics

based on the following formula:

LFO&Myt.ReV1 = Relevant Reference Generation Tariff Component

/ \VPI(RCn)(WPItRCVWhere:

LFO&M(, it,.,.) = the revised Local Fixed O&M Cost

Component applicable for the relevant quarter

\`(rP I (R-) the revised \\"PI of manufacturing in Pakistan for the

month prior io the month in which indexation is applicable, as

notified by the Federal Bureau of Statistics.

the \XTPI of manufacturing in Pakistan for the month

in which t.iriff is determined , as notified by the Federal

Bureau of Statistics.

9.1.2 Fixed O& M (Foreign) Cost Component

The Reference Fixed O&M (Foreign) Cost Component shall be quarterly indexed to

both:

(a) the USD/PKR exchange race, based on the revised TT & OD selling rate of

USD notified by the National Bank of Pakistan; and

(b) the US CPI (for all Urban consumers), issued by the US Bureau of Labor

Statistics.

The applicable formula shall be as follows:

FO&M,RCy, = Relevant Reference Generation Tariff Component *

(US CPI,lt",/ US CPI,

Where:

FX USD,R^0/86.2)

61

SAPPHIRE. WIND POWER COMPANY LIMITED

US CPI(H,.,.)

US CPI(,t,.o

TARIFF PETITION

the revised Fixed O&h1 (Foreign) Cost Component,

applicable for the relevant quarter

the revised US CPI ( for all Urban -consumers) for the

month prior to the month in which indexation is

applicable , issued by US Bureau of Labor Statistics.

the I'S CPI (for all Urban-consumers) for the month

in which tariff is determined , as issued by US

Bureau of Labor Statistics.

FX USD(R,.,.) = the revised TT & OD selling rate of PKR/USD as on

the date on which indexation is applicable, as

notified by the National Bank of Pakistan.

9.1.3 Insurance Cost

The Reference Insurance Cost Component shall be quarterly indexed to USD/PKR

exchange rate, based on the revised IT & OD selling rate of USD notified by the

National Bank of Pakistan.

Furthermore, the Reference Insurance Cost Component has been calculated on the

basis of insurance premium of US$ 1.075 million (1% of the EPC Price) per annum,

which is subject to a maximum call of 1.35"4, of the EPC Price per annum on the

production of actual insurance premium. This adjustment of Insurance Cost

Component of the Reference Generation Tariff for increased insurance premium shall

only be applicable if the actual insurance premium for any year is more than US$ 1.075

million (1.00% of the I:PC Price) :end shall be applied for by the Project Company

along with the quarterly indexations and shall be applicable for the next year.

(a) Indexation Formula

The indexation of the Insurance Cost Component shall be based on the

following formula:

Insurance = Relevant Reference Generation Tariff Component

(FX USI) / 86.2

\<'here:

Insurance(5) = the revised Insurance Cost Component applicable for the

relevant quarter

FX USD(,t,.,) = the revised TI' & OD selling rate of PKR/USD as on thedate on which indexation is applicable , as notified by theNational flank of Pakistan.

i^ t i, 62

SAPPHIRE WIND T'OWER COMPANY LIMITEI)

(b) jdiustrnent Formula

TARIFF PETITION

The adjustment of the Insurance Cost Component for increase in insurance

premium shall be based on the following formula:

Insurance = Relevant Reference Generation Tariff Component

Where:

Insurance ( ,,, = the revised Insurance Cost Component applicable

for the relevant year

Actual Insurance Premium or 1.35% of the

I :PC Price whichever is lower

9.1.4 Return On Equity

Reference Insurance Premium of US$ 1.075

million (1.00% of the EPC Price)

In line with NEPRA's previous determinations for thermal IPPs and the Wind IPPs,

the ROE Component of the Reference Generation Tariff shall be quarterly indexed to

the USD/PKR exchange rate, based on the revised TT & OD selling rate of USD

notified by the National Bank of Pakistan.

The applicable formula shall be as fellows:

ROE,RC„, = Relevant Reference Generation Tariff Component'll

(FX USD,^ /86.2

\X'here:

ROE(R,.,,) = the revised ROE' component applicable for the

relevant quarter

FX USD(, ,,.V) the revised TT & OD selling rate of PKR/USD as on

the d.)te on which indexation is applicable, as notified

by the National Bank of Pakistan.

9.1.5 Withholding Tax on Dividend

The Reference Withholding Tax Component shall be quarterly indexed to USD/PKRexchange rate, based on the revised 71-1' & OD selling rate of USD notified by theNational Bank of Pakistan.

63


The applicable formula shall be as follows:

TARIFF PETITION

HT = Relevant Reference Generation Tariff Com ponent * (FX USD

Where:

\Vl IT(H,.V) = the revised Withholding Tax Component applicable for the

relevant quarter

FX USD(H,.,.)= the revised IT & OD selling rate of PKR/USD as on the

date on which indexation is applicable , as notified by

the National Bank of Pakistan.

9.1.6 Principal Component (Foreign)

The Reference Principal Component (Foreign) shall be semi-annually indexed to

USD/PKR exchange rate, based on the revised TT & OD selling rate of USD notified

by the National Bank of Pakistan.

The applicable formula shall be as f, ,)lows:

PRIN ,R,,,, = Relevant Reference Generation Tariff Component * (FX USD^

6.2

Where:

PRINt,(,.,.) = the revised Principal Component (Foreign) applicable for the

relevant semi-annual period

FX USD(1( )= the revised IT & OD selling rate of PKR/USD as on the

date on which indexation is applicable, as notified by


9.1.7 Interest Charges (Foreign)

The Interest Charges (Foreign) part of the Reference Debt Service Component shall

be semi-annually adjusted for variations in interest rate as a result of variation in 6

months LIBOR & foreign exchange fluctuations in the PKR / USD exchange rate.

The rationale for such semi-annual indexation is submitted in Section 67 (Debt

Seniciug) of the Tariff Petition

The Interest Charges (Foreign) of the Debt Service Component shall be indexed based

on the following formula:

I(Rev, = Relevant Generation Tariff Com onent * LIBOR + Mar in% /

LIBOR tH^ I + Margin %)* (FX USD,R ,,, /86.2)

640'7

SAPPHIRE WIND POWER COMPANY LIMITED TARIFF PETITIOUJ

Where:

the revised Interest Charge component applicable for the

relevant semi-annual period

Libor(,t.,.)

Libor(Rr )

the revised 6 month LIBOR rate at the end of each

6 months period.

6 month LIBOR rate prevailing on the date of tariff

determination (0 .48%)

Margin% _ 4.50%u for debt funding provided by Eco or

5.00"., for debt funding provided by ICBC

FX USD(R,.V) the revised 1'C & OD selling rate of PKR/ USD as on the

date on which indexation is applicable , as notified by


9.1.8 Interest Charges (Local) .

The Interest Charges (Local) part of" the Reference Debt Service Component shall be

semi-annually adjusted for variations in interest rate as a result of variation in 6

months KIBOR. The rationale for such semi -annual indexation is submitted inSection Error! Reference source not found . (Debt Senicin,0 of the Tariff Petition.

The Interest Charges (Local) of the Debt Service Component shall be indexed based

on the following formula:

1I,1,, = Relevant Generation Tariff Component * (KIBOR,R,, + 3.00%) /1

(KIBOR uten+ 3.00%)

Where:

lot,,)

Kibor,R,,,.)

Kibor R,.0

the revised Interest Charge component applicable for the

relevant semi annual period

the revised 6 month KIBOR rate at the end of each

6 months period.

6 month KIBOR rate prevailing on the date of tariff

determination (I3.38%)

9.2 ADIUSTMENTS AT COD

NEPRA is requested to allow the adjustments to the Reference Generation Tariff at

the time of true up at COD., .

65t, 1 . )

SAPPHIRE WIND POWER COMPANY LIMITED TARIFF PETITIOPI

9.2.1 Adjustments To Project Cost

It is submitted that the Project Cost be adjusted at COD for the following based on

the assumptions detailed in Section a5 (Project Cost e&Tarij) and the adjustment to the

Project Cost to be reflected in the relevant tariff components (Return on Equity and

Debt Servicing):

(a) The Principal repayment and cost of debt be adjusted at COD as per the actual

borrowing composition;

(b) Interest during Constructium be adjusted as per actual based on actual

disbursement of loans and prevailing KIBOR / LIBOR rates during the

project construction period;

(c) The specific items of Project Cost to be incurred in foreign currency (US$) be

adjusted at COD based on the PKR / US$ exchange rate prevailing on the

date the transaction was carried out;

(d) Customs duty and other taxes be adjusted as per actual;

(e) Impact of Sindh Sales T.ix on Services Act 2011, Sindh Infrastructure

(0

Development Surcharge, and Federal Excise Duty be allowed as a pass-through;

Return on Equity be adjusted at COD in accordance with the GOP Policy for

Development of Renewable Energy for Power Generation 2006 in order to

ensure an IRR based return of 18% on equity (while treating the project as a

Build-Own-Operate type pri )ject).

9.2.2 Adjustment To Working Capital Facile for the Project

A Working Capital facility of PKR 85.5 million has been estimated for the Project,

which does not include the impact of PKR / USD, PKR / Euro and variations inKIBOR / LIBOR. The actual amount of working capital required by the Project canonly be assessed once COD has been achieved. For this reason, it is humbly prayed

that NEPRA allow the Project Company to claim One-Time Adjustment to the extentof working capital required by the Project at the time of achievement of COD.

0 7^' 66


10. CONSIDERATIONS WITH RESPECT To EPA

10.1 BENCHMARK ENERGY AND COMPLEX MONTHLY POWER CURVE TABLES

The Benchmark Energy Table and Complex Monthly Power Curve are used by the

Power Purchaser as a means of estimating the performance of the Project. These

provide a benchmark for the energy to be produced by the Project at a given wind

speed. The payments to the Project Company for the energy produced as well as the

coverage provided to the Project against wind speed variability risk shall be based on

these tables and the same shall be attached as Schedule 1 Annex 2 of the EPA. The

said tables also form the basis of payment to the Project Company against Non-

Project Missed Volume (as defined under the EPA). NEPRA is therefore requested to

approve the Benchmark Energy Table and Complex Monthly Power Curve provided

below in order for the same to be appended as Schedule 1 Annex 2 of the EPA.

BENCHMARK ENERGY PRODUCTION TABLE

I

MonthsBenchmark

Wind Speed m /sBenchmark Energy

GWh (Year 1)Benchmark Energy

GWh (Year 2-20)

January 5.3 5.72 5.8

February 5.6 5.92 6.02

March 5.9 6.83 6.94

April 7.7 13.36 13.56

May 9.8 20.3 20.61

June 10.2 21.92 22.25

July 10.3 19.94 20 25

August 9.6 18.88 19.17

September 8.0 14.15 14.37

October 5.2 4.32 4.37

November 4.5 3.18 3.23

December 4.9 4.28 4.34

Mean ofMonths

7.3

Annual Energy (GWh p. a) 138.8t - I

140.9

67


As per international wind industry norms, during the first year of operations a windpower project is susceptible to various site-specific issues resulting in a lower level ofavailability of the \X'TG's. Therefore during this specific period the availabilitywarranted by the WTG supplier is lower compared to the availability warranted from

the second year onwards.

'i -tS 68


COMPLEX MONTHLY POWER CURVE TABLE

Complex Monthly Power Curve Energy (Yearl)

Wind Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSpeed

GWh

3 0.51 0.44 0.25 0.21 0.19 0.06 0.50 0.43 0.19 0.20 0.50 0.43

3.1 0.62 0.53 0.33 0.29 0.27 0.12 0.60 0.53 0.27 0.29 0.62 0.53

3.2 0.75 0.64 0.43 0.39 0.37 0.20 0.72 0.64 0.36 0.38 0.74 0.65

3.3 0.89 0.76 0.53 0.49 0.47 0.28 0.85 0.77 0.46 0.49 0.86 0.78

3.4 1.04 0.90 0.65 0.60 0.58 0.38 0.99 0.91 0.55 0.59 1.00 0.92

3.5 1.19 1.04 0.78 0.73 0.71 0.49 1.14 1.06 0.67 0.72 1.15 1.07

3.6 1.36 1.19 0.93 0.86 0.85 0.60 1.31 1.22 0.80 0.86 1.31 1.24

3.7 1.53 1.35 1.08 1.01 1.00 0.73 1.48 1.38 0.94 1.00 1.48 1.41

3.6 1.73 1.31 1.24 1.17 1.16 0.66 1.66 155 Lug 1.16 1.63 1.56

3.9 1.93 1.68 1.41 1.33 1.33 1.03 1.85 1.75 1.25 1.33 1.84 1.78

4 2.14 1.87 1.58 1.50. 1.50 1.19 2.06 1.95 1.41 1.50 2.04 1.98

4.1 2.37 . 2.07 1.78 1.69 1.69 1.36 2.27 2.16 1.58 1.68 2.25 2.20

4.2 2.59 2.27 1.98 1.88 1.89 1.53 2.49 2.38 1." 1.88 2.48 2.42

4.3 2.84 2.48 2.19 2.09 2.11 1.72 2.72 2.61 1.97 2.09 2.69 2.65

4.4 3.08 2.70 2.41 2.30 2.33 1.92 2.96 2.85 2.17 2.30 2.93 2.90

45 3.35 2.93 2.64 2.52 2.55 2.13 3.21 3.09 2.39 2.52 3.18 3.15

4.6 3.61 3.17 2.88 2.74 2.79 2.35 3.47 3.36 2.60 2.75 3.45 3.43

4.7 3.89 3.42 3.13 2.99 3.04 2.56 3.72 3.61 2.83 3.00 3.70 3.69

4.8 4.18 3.66 3.39 3.23 3.30 2.79 3.99 3.90 3.07 3.24 3.98 3.97

4.9 4.46 3.92 3.65 3.47 3.55 3.03 4.28 4.18 3.32 3.48 4.27 4.28

69



GWh

5 4.77 4.20 3.92 3.75 3.83 3.28 4.55 4.46 3.57 3.76 4.55 4.57

5.1 5.08 4 .46 4.22 4.02 4.11 3.53 4.85 4.78 3.84 4.03 4.85 4.89

5.2 5.40 4.75 4.50 4.32 4.40 3.80 5.15 5.08 4.12 4.32 5.17 5.22

5.3 5.72 5.04 4.82 4.60 4.70 4.07 5.45 5.40 4.40 4.59 5.47 5.55

5.4 6.05 5.33 5.13 4.90 5.00 4.37 5.77 5.72 4.70 4.89 5.79 5.89

5.5 6.38 5.62 5.45 5.22 5.32 4.65 6.08 6.05 5.00 5.20 6.12 6.25

5.6 6.71 5.92 5.78 5.53 5.64 4.95 6.40 6.38 5.32 5.51 6.44 6.59

5.7 7.06 6.24 6.13 5.86 5.97 5.27 6.71 6.71 5.63 5.82 6.76 6.95

5.8 7.40 6.53 6.47 6.21 6.31 5.59 7.05 7.06 5.96 6.16 7.10 7.32

5.9 7.73 6.84 6.83 6.55 6.66 5.92 7.37 7.41 6.30 6.48 7.43 7.68

6 8.09 7.16 7.19 6.90 7.01 6.26 7.69 7.74 6.65 6.82 7.75 8.06

6.1 8.43 7.47 7.56 7.26 7.37 6.61 8.04 8 .10 7.00 7.17 8.10 8.42

6.2 8.77 7.78 7.94 7.63 7.72 6.97 8.37 8.45 7.36 7.52 8.42 8.79

6.3 9.12 8.10 8.32 8.00 8 .10 7.34 8.70 8.80 7.71 7.88 8 .74 9.17

6.4 9.47 8.42 8.69 8.37 8.47 7.71 9.03 9.15 8.09 8.24 9.07 9.53

6.5 9.81 8.74 9.07 8.75 8.84 8.10 9.38 9.49 8.46 8.59 9.40 9.91

6.6 10.16 9.06 9.46 9.13 9.23 8.49 9.70 9.85 8.84 8.97 9.71 10.28

6.7 10.49 9.38 9.85 9.51 9.60 8.89 10.04 10.20 9.22 9.34 10.03 10.64

6.8 10.84 9.69 10.24 9.91 9.99 9.30 10.38 10.54 9.59 9.70 10.36 11.00

6.9 11.18 10.00 10.62 10.30 10.39 9.71 10.70 10.89 9.98 10.07 10.66 11.36

7 11.51 10.33 11.01 10.68 10.77 10.13 11.03 11.24 10.38 10.44 10.97 11.72

7.1 11.84 10.63 11.39 11.07 11.17 10.54 11.36 11.58 10.75 10.82 11.28 12.07

7.2 12.18 10.94 11.79 11.45 11.55 10.97 11.69 11.92 11.14 11.20 11.57 12-41

7.3 12.49 11.25 12.18 11.84 11.94 11.39 12.01 12.26 11.52 11.56 11.87 12.76

70


WindS d

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Decpee

GWh7.4 12.82 11.55 12.55 12.23 12.33 11.82 12.33 12.59 11.91 11.93 12.17 13.117.5 13.15 11.85 12.93 12.61 12.72 12.27 12.65 12.92 12.29 12.30 12.45 13.437.6 13.45 12.15 13.30 12.98 13.11 12.69 12.97 13.24 12.67 12.67 12.74 13.767.7 13.76 12.43 13.67 13.36 13.48 13.12 13.28 13.57 13.05 13.04 13.03 14.107.8 14.08 12.73 14.04 13.72 13.86 13.54 13.59 13.88 13.41 13.39 13.31 14.41

7.9 14.37 13.02 14.40 14.10 14.24 13.97 13.89 14.20 13.79 13.75 13.58 14.738 14.67 13.30 14.75 14.45 14.60 14.38 14.19 14.51 14.15 14.11 13.85 15.05

8.1 14.97 13.58 15.11 14.80 14.98 14.80 14.49 14.82 14.52 14.45 14.13 15.35

8.2 15.26 13.85 15.45 15.15 15.35 15.22 14.78 15.12 14.87 14.80 14.39 15.64

8.3 15.54 14.13 15.79 15.49 15.69 15.62 15.07 15.42 .15.23 15.14 14.65 15.95

8.4 15.83 14.38 16.13 15.83 16.05 16-02 15.36 15.71 15.56 15.48 14.92 16.24

8.5 16.10 14.64 16.45 16.16 16.39 16.42 15.64 16.00 15.91 15.81 15.17 16.51

8.6 16.37 14.90 16.78 16.47 16.73 16.81 15.92 16.29 16.25 16.13 15.42 16.80

8.7 16.64 15.15 17.10 16.79 17.07 17.19 16.20 16.56 16.57 16.44 15.67 17.08

8.8 16.91 15.39 17.40 17.10 17.39 17.55 16.45 16.84 16.90 16.77 15.93 17.35

8.9 17.16 15.63 17.71 17.39 17.72 17.92 16.73 17.11 17.22 17.08 16.17 17.61

9 17.40 15.88 18.01 17.70 18-03 1829 16.98 17.37 17.52 17.37 16.41 17.87

9.1 17.66 16.11 18.31 17.98 18.33 18.63 17.25 17.64 17.83 17.67 16.64 18.14

9.2 17.90 16.34 18.59 18.27 18.64 18.97 17.49 17.89 18.13 17.97 16.89 18.38

9.3 18.15 16.55 18.87 18.54 18.93 19.30 17.74 18.15 18.41 1826 17.12 18.63

9.4 18.37 16.78 19. 15 18.80 19.23 19.63 17.98 18.39 18.71 18.53 17.34 18.87

9.5 18.61 16.99 19.40 19.07 19.50 19.94 18.22 18.64 18.99 18.80 17.56 19.12

9.6 18.83 17.20 19.67 19.31 19.77 20.25 18.44 18.88 19 .26 19.07 17.79 19.34

9.7 19.06 17.39 19.93 19.57 20.05 20.55 18.68 19:12 19.53 19.32 18.01 19.58

71



GWh9.8 19 .27 17.60 20.18 19.81 20.30 20.84 18.90 19.33 19.79 19.59 18.23 19.80

9.9 19.48 17.80 20.42 20.05 20.56 21.12 19.12 19.57 20.05 19.83 18 .43 20.03

10 19.69 17.98 20.65 20.28 20.81 21.39 19.32 19.78 20.30 20.09 18.65 20.24

10.1 19.89 18.17 20.89 20.50 21.06 21.65 19.54 20.00 20.54 20.31 18.85 20.45

10.2 20.09 18 .34 21.12 20.71 21.29 21.92 19.74 20.21 20.78 20.55 19.06 20.65

10.3 20.27 18.52 21.33 20.93 21.51 22.17 19.94 20.41 21.02 20.77 19.26 20.86

10.4 20.46 18.70 21.55 21.13 21.73 22.41 20.14 20.62 21.24 21.00 19.45 21.07

10.5 20.63 18.86 21.76 21.33 21.96 22.64 20.32 20.81 21.46 21.21 19.65 21.26

10.6 20.81 19.02 21.98 21.53 22.16 22.88 20.51 21.00 21.68 21.41 19.83 21.44

10.7 20.99 19.18 22.17 21.72 22.36 23.10' 20.68 21.18 21.89 21.61 20.02 21.62

10.8 21.15 19.32 22.36 21.91 22.56 23.31 20.86 21.36 22.10 21.83 20.19 21.81

10.9 21.30 19.47 22.55 22.08 22.76 23.51 21.03 21.54 22.29 22.01 20.36 21.99

11 21.46 19.61 22.74 22.26 22.94 23.72 21.19 21.70 22.48 22.20 20.54 22.16

11.1 21.61 19.74 22.93 22.43 23.13 23.91 21.35 21.87 22.68 22.38 20.70 22.32

11.2 21:76 19.88 23.10 22.59 23.30 24.10 21.51 22.02 22.87 22.55 20.86 22.48

11.3 21.90 20.01 23.27 22.75 23.46 24.28 21.65 22.18 23.05 22.72 21.02 22.64

11.4 22.03 20.14 23.43 22.91 23.63 24.46 21.80 22.32 23.23 22.90 21.17 22.80

11.5 22.16 20.25 23.59 23.06 23.80 24.63 21.94 22.47 23.39 23.05 21.31 22.94

11.6 22.28 20.35 23.75 23.21 23.94 24.80 22.07 22.60 23.56 23.21 21.45 23.09

11.7 22.40 20.47 23.90 23.35 24.10 24.96 22.20 22.74 23.72 23.36 21.58 23.23

11.8 22.51 20.57 24.05 23.48 24.25 25.12 22.32 22.87 23.87 23.50 21.71 23.36

11.9 22.62 20.67 24.20 23.62 24.37 25.25 22.44 22.98 24.03 23.64 21.84 23.48

12 22.72 20.76 24.33 23.75 24.51 25.41 22.55 23.10 24.18 23.78 21.96 23.61

12.1 22.82 20.86 24.46 23.87 24.64 25.55 22.66 23.21 24.32 23.91 22.06 23.73

72


WinddS

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Decpee

GWh12.2 22.91 20.94 24.59 24.00 24.76 25.69 22.77 23.31 24.46 24.04 22.17 23.8412.3 22.99 21.03 24.72 24.12 24.88 25.82 22.87 23.40 24.60 24.17 22.27 23.9412.4 23.08 21.10 24.83 24.24 24.99 25.95 22.96 23.50 24.73 24.28 22.36 24.0412.5 23.15 21.17 24.95 24.33 25.11 26.08 23.05 23.59 24.85 24.38 22.45 24.1412.6 23.23 21.24 25.06 24.44 25.22 26.19 23.14 23.67 24.97 24.49 22.52 24.2312.7 23.29 21.30 25.17 24.54 25.30 26.30 23.23 23.75 25.10 24.60 22.59 24.3012.8 23.35 21.36 25.25 24.64 25.40 26.42 23.29 23.83 25.21 24.70 22.66 24.3712.9 23.40 21.42 25.35 24.74 25.49 26.53 23.37 23.89 25.30 24:80 22.73 24.4413 23.45 21.48 25.44 24.82 25.58 26.64 23.43 23.95 25.41 24.88 22.79 245013.1 23.50 21.53 25.52 24.91 25.67 26.73 23.49 24.01 25.51 24.97 2184 24.5613.2 23.54 21.56 25.61 24.99 25.74 26.83 23.53 24.06 25.61 25.05 22.89 24.6113.3 23.58 21.60 25.68 25.07 25.81 26.93 23.61 24.11 25.70 25.13 22.93 24.6513.4 23.61 21.64 25.74 25.15 25.88 27.02 23.66 24.15 25.78 25.20 22.95 24.69

13.5 23.64 21.68 25.81 25.22 25.95 27.11 23.70 24.19 25.87 25.25 22.98 24.72

13.6 23.67 21.71 25.87 25.26 26.01 27.19 23.74 24.22 25.95 25.32 23.01 24.74

13.7 23.69 21.73 25.92 25.32 26.07 27.26 23.78 24.25 26.02 25.38 23.03 24.76

13.8 23.70 21.76 25.97 25.38 26.13 27.34 23.82 24.26 26.09 25.43 23.04 24.77

13.9 23.72 21.78 26.02 25.43 26.18 27.41 23.84 24.28 26.15 25.48 23.05 24.78

14 23.73 21.79 26.06 25.48 26.21 27.49 23.87 24.30 26.20 25.53 23.06 24.78

14.1 23.73 21.80 26.09 25.52 26.24 27.55 23.88 24.31 26.25 25.57 23.06 24.77

14.2 23.73 21.81 26.12 25.56 26.28 27.61 23.90 24.31 26.30 25.60 23.05 24.76

14.3 23.73 21.82 26.14 25.59 26.31 27.67 23.91 24.31 26.34 25.63 23.04 24.74

14.4 23.72 21.82 26.16 25.62 26.34 27.73 23.92 24.31 26.38 25.66 23.03 24.72

14.5 23.71 21.82 26.17 25.64 26.37 27.78 23.93 24.30 26.41 25.68 23.02 24.70

73



GWh

14.6 23.69 21.81 26.17 25.66 26.39 27.83 23.93 24.29 26.44 25.70 23.00 24.66

14.7 23.68 21 .80 26 .17 25.67 26.40 27.87 23.93 24.28 26.46 25.72 22.98 24.63

14.8 23.66 21.79 26.17 25.68 26.41 27.91 23.92 24.26 26.48 25.72 22.95 24.58

14.9 23.63 21.77 26.16 25.68 26.42 27.95 23.91 24.25 26.49 25.72 22.93 24.54

15 23.60 21.75 26.15 25.68 26.42 27.98 23.90 24.22 26.50 25.72 22.90 24.49

74


Complex Monthly Power Curve Energy (Year 2-10)

Wind Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSpeed (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) (GWh)

3 0.52 0.45 0.25 0.21 0.19 0.06 0.50 0.43 0.20 0.21 0.52 0.44

3.1 0.64 0.55 0.34 0.29 0.27 0.13 0.62 0.54 0.27 0.29 0.63 0.55

3.2 0.77 0.66 0.44 0.39 0.37 0.20 0.74 0.66 0.36 0.38 0.76 0.67

3.3 0.90 0.79 0.55 0.50 0.48 0.28 0.86 0 .79 0.46 0.49 0.88 0.81

3.4 1.05 0.91 0.67 0.62 0.60 0.38 1.01 0.92 0.57 0.61 1.02 0.94

3.5 1.22 1.05 0.81 0.75 0.73 0.50 1.17 1.08 0.69 0.74 1.17 1.09

3.6 1.38 1.21 0.94 0.88 0.86 0.62 •1:33 1.24 0.81 0.87 1.34 1.26

3.7 1.56 1.36 1.10 1.03 1.01 0.75 1.50 1.40 0.96 1.02 1.50 1.43

3.8 1.76 1.53 1.26 1.19 1.18 0.89 1.69 1.59 1.11 1.18 1.68 1.61

3.'9 1.96 1.72 1.43 1.35 1.35 1.u5 1.89 1.70 1.27 1.35 1.88 1.81

4 2.18 1.90 1.61 1.53 1.53 1.21 2.09 1.98 1.43 1.52 2.07 2.01

4.1 2.41 2.10 1.81 1.72 1.73 1.38 2.31 2.19 1.61 1.72 2.29 2.23

4.2 2.64 2.31 2.01 1.91 1.92 1.56 2.53 2.42 1.80 1.91 2.51 2.46

4.3 2.89 2.51 2.23 2.12 2.14 1.-6 2.7 2.65 2.00 2.12 2.74 2.70

4.4 3.13 2.74 2.44 2.34 2.37 1.95 3.00 2.90 2.21 2.34 2.97 2.95

4.5 3.40 2.97 2.68 2.55 2.60 2.16 3.26 3.14 2.43 2.56 3.23 3.20

4.6 3.67 3 2' 2.93 2.79 2.84 2.39 3.51 3.41 2.64 2.80 3.49 3.47

4.7 3.95 3.4-17 3.17 3.02 3.08 2.60 3.78 3.67 2.88 3.03 3.76 3.75

4.8 4.24 3.72 3.44 3.28 3.35 2.84 4.06 3.95 3.11 3.29 4.04 4.04

4.9 4.54 3.99 3.71 3.53 3.61 3.07 4.34 4.25 3.38 3.54 4.33 4.34

1 54.84 4.26 3.99 3.81 3.89 3.33 4.63 4.54 3.63 3.82 4.62 4.65

75


Windd

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSpee (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) (GWh)

5.1 5.16 4.54 4.28 4.08 4.17 3.58 4.92 4.84 3.90 4.09 4.93 4.97

5.2 5.48 4.82 4.58 4.37 4.47 3.86 5.23 5.16 4.18 4.37 5.24 5.29

5.3 5.80 5.12 4.89 4.67 4.77 4.13 5.54 5.48 4.47 4.67 5.57 5.64

5.4 6.15 5.41 5.21 4.98 5.09 4.42 5.85 5.80 4.77 4.97 5.88 5.98

5.5 6.4k 5.71 5.54 5.29 5.40 4.72 6.18 6.15 5.08 5.27 6.21 6.33

5.6 6.81 6.02 5.87 5.63 5.73 5.03 6.49 6.48 5.39 5.60 6.54 6.69

5.7 7.16 6.32 6.22 5.96 6.07 5 .34 6.81 6 .82 5.72 5.92 6.87 7.06

5.8 7.51 6.64 6.58 6.29 6.41 5.68 7.15 7.17 6.06 6.24 7.21 7.43

5.9 7.85 6.95 6.94 6.66 6.76 6.01 7.48 7.52 6.40 6.59 7.55 7.80

6 8.21 727 7.30 7.01 7.11 6.35 7.82 7.86 6.75 6.93 7.87 8.17

6.1 8.55 7.58 7.68 7.37 7.48 6.71 8..15 8.22 7.11 7.29 8.21 8.55

6.2 8.92 7.91 8.05 7.74 7.84 7.08 8.49 8.57 7.47 7.63 8.54 8.93

6.3 9.26 8.23 8.44 8.11 8.22 • 7.45 8.84 8.93 7.84 8.00 8.89 9.31

6.4 9.61 8.55 8.83 8.49 8.59 7.84 9.17 9.29 8.21 8.37 9.21 9.68

6.5 9.96 8.88 9.22 8.89 8 .97 8.23 9.51 9.64 8.58 8.73 9.53 10.05

6.6 10.32 9.20 9.60 927 9.37 8.62 9.86 10.00 8.96 9.10 9.87 10.43

6.7 10.66 9.51 10.00 9.66 9.76 9.02 10.19 10.35 9.,6 9.47 10.19 10.80

6.8 11.01 9.85 10.39 10.05 10.15 9.44 10.53 10.71 9.75 9.86 10.51 11.17

6.9 11.34 10.16 10.79 10.45 10.54 9.87 10.86 11.07 10.13 10.23 10.82 11.54

7 11.69 10.48 11.18 10.84 10.94 10.29 11.20 11.41. 10.53 10.60 11.13 11.90

7.1 12.03 10.79 11.58 11.24 11.33 10.71 11.54 11.75 10.92 10.99 11.45 12.25

7.2 12.36 11.10 11.97 11.63 11.72 11.14 11.86 12.11 11.31 11.36 11.74 12.62

7.3 12.69 11.42 12-35 12.03 12.13 11.58 12.19 12.44 11.70 11.73 12.06 12.96

7.4 13.02 11.72 12.74 12.41 12.52 12.01 12.53 12.77 12.10 12.12 12.35 13.30

76


Wind Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSpeed (GWh) (GWh) (GWh) (GWh) (GWh) •(GWh (GWh) (GWh) ,(GWh) (GWh) (GWh) (GWh)

7.5 13.34 12.04 13.12 12.79 12.91 12.45 12:84 13.11 12.48 12.49 12.64 13.64

7.6 13.66 12.33 13.51 13.18 13.30 12.88 13.16 13.45 12.86 12.86 12.94 13.987.7 13.98 12.64 13.88 13.56 13.69 13.31 13.48 13.78 13.25 13.23 13.23 14.31

7.8 14.29 12.92 14.26 13.94 14.07 13.75 13:79 14.09 13.62 13.60 13.51 14.63

7.9 14.59 13.22 14.62 14.31 14.46 14.18 14.10 14.42 14.00 13.96 13.79 14.94

8 14.90 13.50 14.97 14.67 14.84 14.60 14.41 14.73 14.37 14.33 14.06 15.27

8.1 15.20 13.79 15.34 15.02 15.21 15.02 14.71 15.04 14.74 14.68 14.34 15.58

8.2 15.48 14.06 15.69 15.39 15.57 15.44 15.00 15.36 15.10 15.02 14.61 15.88

8.3 15.79 14.33 16.03 15.73 15.94 15.86 15.31 15.65 15.45 15-38 14.88 16.19

8.4 16.06 14.60 16.37 16.06 1 6.30 16.27 15.59 15.95 15.81 15.71 15.14 16.48

8.5 16.34 14.87 16.71 16.40 16.64 16.67 15.88 16.25 16.15 16.04 15.40 16.77

8.6 16.62 15.12 17.03 16.73 16.99 17.06 16.16 16.53 16.49 16.38 15.66 17.05

8.7 16. 89 15 .39 17.35 17.04. 17.32 17.45 16.44 16.81 16.82 16.70 15.91 17.33

8.8 17.16 15.63 17.67 17.36 17.66 17.82 16.71 17.09 17.15 17.03 16.17 17.61

8.9 17.42 15.88 17.98 17.67 17.99 18.19 16.98 17.37 17.48 17.33 16.41 17.88

9 17.68 16.12 18.28 17.97 18.30 18.57 17.24 17.64 17.79 17.64 16.66 18.15

9.1 17.93 16.35 18-59 18.25 18.62 18.91 17.51 17.91 18.11 17.95 16.90 18.41

9.2 18.17 16.58 18.87 18.55 18.92 19.25 17.75 18.16 18.40 18.23 17.14 18.66

9.3 18.42 16.81 19.16 18.82 19 .22 19.59 18.01 18.43 18.69 18.53 17.37 18.92

9.4 18.66 17.03 19.43 19.09 19.52 19.93 18.25 18.67 19.00 18.81 17.60 19.16

9.5 18.89 17.24 19.71 19.36 19.80 20.25 18.50 18.93 19.27 19.09 17.83 19.41

9.6 19.12 17.46 19.97 19.61 20.08 20.55 18.72 19.17 19.55 19.36 18.07 19.64

9.7 19.34 17.67 20.23 19.87 20.35 20.86 18.96 19.40 19.83 19.63 18. 28 19.88

9.8 19.56 17.87 20.48 20.11 20.61 21.16 19.19 19.64 20.09 19.88 18 .51 20.10

77


Wind Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSpeed (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) (GWh ) (GWh) (GWh) (GWh) (GWh)

9.9 19.77 18.07 20.73 20.35 20.87 21.43 19.41 19.86 20.35 20.14 18.71 20.33

10 19.99 18.25 20.97 20. 58 21 .12 21.72 19.62 20.08 20.61 20.38 18.93 20.54

10.1 20.19 18.45 21.21 20.82 21.37 21.98 19.83 20.30 20.85 20.63 19.14 20.77

10.2 20.39 18.63 21.43 21.03 21.61 22.25 20.04 20.51 21.10 20.86 19.35 20.97

10.3 20.58 18.80 21 .66 21.25 21.84 22.50 20.25 20.73 21.34 21.09 19.55 21.18

10.4 20.77 18.98 21.88 21 .45 22.06 22.75 20.44 20.92 21.56 21.32 19.74 21.37

10.5 20.95 19.15 22.10 21.66 22.29 22.98 20.63 21.12 21.80 21.53 19.94 21.57

10.6 21.13 19.31 22.30 21.85 22.49 23.22 20.82 21.32 22.00 21.75 20.13 21.77

10.7 21.31 19.47 22.50 22.05 22.71 23.45 20.99 21.50 22.23 21.94 20.32 21.95

10.8 21.47 19.62 22.71 22.24 22.91 23.66 21.18 21.69 22.43 22.15 20.49 22.14

10.9 21.63 19.76 22.90 22.42 23.10 23.87 21.36 21.86 22.64 22.34 20.68 22.32

11 21.80 19.91 23.09 22.59 23.29 24.08 21.51 22.03 22.83 22.53 20.85 22.49

11.1 21.94 20.05 23.27 22.76 23.48 24.27 21.68 22.20 23.02 22.72 21.01 22.66

11.2 22.09 20.18 23.45 22.94 23.66 24.47 21.83 22.36 23.21 22.90 21.18 22.83

11.3 22.23 20.31 23.62 23.10 23.82 24.64 21.98 22.51 23.40 23.07 21.35 22.98

11.4 22.37 20.44 23.79 23.25 24.00 24.83 22.13 22.67 23.57 23.23 21.49 23.14

11.5 22.49 20.55 23.96 23.41 24.15 25.01 22.28 22.81 23.74 23.40 21.64 23.29

11.6 22.62 20.67 24.11 23.56 24.31 25.17 22.41 22.95 23.92 23.56 21.79 23.44

11.7 22.75 20.79 24.26 23.70 24.46 25.34 22.53 23.08 24.08 23.71 21.91 23.58

11.8 22.85 20.88 24.42 23.84 24.60 25.50 22.66 23.21 24.24 23.86 22.04 23.71

11.9 22.97 20.98 24.57 23.98 24.74 25.65 22.78. 23.33 24.40 24.01 22.17 23.84

12 23.06 21.08 24.69 24.11 24.88 25.79 22.90 23.45 24.55 24.13 2229 23.97

12.1 23.17 21.17 24.83 24.23 25.02 25.94 23.01 23.56 24.69 24.27 22.40 24.09

12.2 23.25 21.26 24.97 24.36 25.14 26.08 23.12 23.67 24.83 24.41 22.50 24.19

78

cxCC


Wind Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSpeed (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) GWh( ) (GWh) (GWh) (GWh) (GWh) (GWh)

12.3 23.34 21.35 25.09 24.49 25.25 26.22 23.21 23.76 24.97 24.53 22.60 24.30

12.4 23.43 21.41 25.20 24.60 25.37 26.34 23.31 23.86 25.10 24.64 22.70 24.41

12.5 23.51 21.49 25.32 24.70 25.49 26.46 23.41 23.95 25.22 24.76 22.78 24.51

12.6 23.57 21.56 25.44 24.81 25.59 26.59 23.50 24.04 25.35 24.87 22.87 24.60

12.7 23.64 21.63 25.54 24.92 25.69 26.71 23.57 24.11 25.48 24.98 22.94 24.66

12.8 23.70 21.69 25.64 25.02 25.79 26.82 23.65 24.18 25.59 25.07 23.01 24.74

12.9 23.76 21.75 25.73 25. 11 25.88 26 .92 23.72 24.25 25.69 25.16 23.07 24.81

13 23.81 21.81 25.83 25.20 25.97 27.03 23.79 24.31 25.80 25.26 23.13 24.88

13.1 23.86 21.85 25.92 25.29 26.05 27.14 23.85 24.37 25.91 25.35 23.19 24.93

13.2 23.90 21.90 25.99 25.37 26.13 27.24 23.91 24.43 26.00 25.43 23.22 24.99

13.3 23.94 21.93 26.07 25.45 26.21 27.33 23.97 24.48 26.09 25.51 23.27 25.03

13.4 23.98 21.97 26.14 25.52 26.27 27.42 24.02 24.52 26.18 25.58 23.30 25.06

13.5 24.01 22.01 26.21 25.59 26.34 27.51 24.06 24.56 26.26 25.65 23.33 25.09

13.6 24.03 22.04 26.26 25.66 26.41 27.60 24.10 24.59 26.34 25.70 23.36 25.11

13.7 24.06 22.06 26.32 25.71 26.46 27.68 24.13 24.60 26.41 25.76 23.38 25.13

13.8 24.06 22.09 26.37 25.77 26.51 27.76 24.17 24.63 26.47 25.82 23.39 25.14

13.9 24.07 22.11 26.41 25.82 26.56 27.83 24.20 24.64 26.54 25.87 23.40 25.14

14 24.08 22.12 26.44 25.87 26.61 27.89 24.22 24.66 26.60 25.92 23.41 25.14

14.1 24.09 22.14 26.47 25.91 26.65 27.96 24.24 24.67 26.66 25.96 23.41 25.14

14.2 24.09 22.14 26.50 25.95 26.69 28.03 24.26 24.67 26.71 25.99 23.40 25.13

14.3 24.08 22.15 26.53 25.98 26.73 28.09 24.27 24.68 26.75 26.02 23.40 25.12

14.4 24.08 22.15 26.54 26.00 26.75 28.15 24.28 24.67 26.''8 26.05 23.38 25.09

14.5 24.07 22.15 26.56 26.03 26.77 28.21 24.29 24.66 26.82 26.07 23.37 25.07

14.6 24.06 22.14 26.56 26.05 26.79 28.26 24.29 24.65 26.14 26.09 23.35 25.04

79


Wind Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSpeed (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) (GWh) (GWh ) (GWh) (GWh)

14.7 24.04 22.13 26.56 26.06 26. 80 28 .29 24.29 24.64 26.87 26.10 23.33 25.01

14.8 24.02 22.12 26.56 26.07 26.82 28 .33 24.28 24.62 26.89 26.11 23.30 24.96

14.9 24.00 22.10 26.55 26.07 26.82 28.37 24.27 24.60 26.89 26.11 23.27 24.92

15 23.97 22.08 26.53 26.07 26.82 28 .39 24.26 24.59 26.90 26.11 23.24 24.86

80


10.2 MONTHLY ENERGY PAYMENTS (BENCHMARK & BONUS)

As per RE Policy 2006, wind risk is ;,uaranteed by the Government of Pakistan and thetariff is based on the monthly benchmark energy table based on the monthly benchmarkwind speeds. Therefore, monthly payments shall be made for the benchmark energy

produced by the Project.

Further, the bonus payments are also applied on any energy produced over and above thebenchmark energy. The standard EPA approved by the GOP provides for payment ofbonus energy on monthly basis. There is no differentiation in the RE Policy between thetiming for payments for monthly benchmark energy and bonus payments. NTDC has inrecent negotiations shifted the bonus payments towards the end of the year on the

argument that" NEPRA's determination was silent on this issue". It is most unfair for a

Project to be penalized for the shortfall energy (energy production below the monthlybenchmark energy) on a monthly basis, but not allowing the quid pro quo of the 10%bonus payment also on monthly basis. The Petitioner therefore prays that NEPRA stateexplicitly in the tariff determination that bonus energy payments should also be made onmonthly basis; if this is not agreed, then any shortfall energy payments should also be

deferred for payment at the end of a year, It is proposed to allow payment of bonus

energy on a monthly basis in the same manner as the payment of benchmark energy ismade by the Power Purchaser under the EPA. For each month, the benchmark energyand the bonus energy (if produced) shall be determined and paid by the purchaser.

10.3 POWER PURCHASE PRIOR To COD

It is standard practice for wind power projects internationally to come online one WTGat a time, thereby, enabling the wind t.irm to commence dispatching energy to the grid assoon as a \VTG is capable of power generation. Commissioning of a WTG cannot becompleted without the substation being completed, tested and commissioned, therefore,

all protection and safety equipment required to ensure smooth, safe operation of thewind farm (and the grid) would already be in place prior to commissioning of the WTGs.As soon as a %Y/TG has been commissioned, it is ready to supply energy to the grid.

The standard EPA approved by the GOP permitted wind power developers to claimcompensation from MDC for supply of electricity prior to achievement of COD. Thishas, however, been removed from the latest draft of the EPA.

NEPRA is therefore requested to allow the Project to claim compensation from thePower Purchaser for all electricity supplied into the grid system prior to achievement ofCOD at the tariff rate applicable for the first year of operation minus the debt servicingcomponents of the tariff.

In case the Project is not allowed to claim compensation, there will be no motivation forthe Project to supply energy into the grid - which could otherwise assist in reducing thedemand-supply gap.

81

SAPPHIRE. WIND POWER COMPANY LIMITED

11. GENERAL ASSUMPTIONS

TARIFF PETITIOPJ

The following have been assumed while calculating the Reference Generation Tariff

and changes in any of these assumptions will result in changes in the Reference

Generation Tariff.

1. Debt : Equity ratio is assumed to be 75:25.

2. Foreign lenders shall contribute towards funding 87 .94% of the Debt (LIBOR

based financing) while the remaining 12.06% will be funded through local financial

institutions (KIBOR based financing).

3. Interest rate for LIBOR based debt (ECO Trade Development Bank) has been

determined based on 6 Month LIBOR plus 4.5% Spread (including the ADB

REDSIP Guarantee markup of 100 bps) and semi -annual indexation on the samewill be allowed by NEPRA.

4. Interest rate for LIBOR based debt (Industrial and Commercial Bank of China)has been determined based on 6 Month LIBOR plus 5% Spread (including theADB REDSIP Guarantee markup of 100 bps) and semi-annual indexation on thesame will be allowed by NEPRA

5. Indexation against PKR / USI) variations will be permitted for debt servicingpayments to be made for settlement of foreign source debt.

6. Interest rate for KIBOR based debt has been determined based on 6 MonthKIBOR plus 3.00%b Spread acid semi -annual indexation on the same will beallowed by NEPRA.

7. A constant ROE of 18%0 (IRR based) is assumed (net of 7.5% withholding tax ondividends) over 20 years. The ROE DC shall be accrued at the time of CODaccording to the actual schedule of equity disbursement.

8. Exchange rate have been assumed to be: PKR 86.2 /USD.

9. Any taxes federal, provincial , local or district, stamp duties and levies etc which arenot factored in the tariff calculation shall be treated as pass through items, in termof EPA. .

10. No customs duties and income tax have been considered for imports. Anychanges in the customs duties or any other duty or tax on import of equipmentand material will be treated as "pass through" to the Power Purchaser. Similarly,customs duties on spare parts after COD will be "passed through" to the PowerPurchaser.

11. The Project does not come under the ambit of Sindh Sales Tax on Services Act,2011. In case it is deemed that the Project is subject to payment of any taxes undersaid act, the same are to be treated as a pass-through to the Power Purchaser.

12. Deduction of withholding tax is assumed only in the On-Shore Contract. No

withholding tax has been considered in the Off- Shore Contract. Any additionaltax, if levied, will be "pass through" to the Power Purchaser

0 9 82


13. 7.5% withholding tax on dividend is assumed. Any changes in the aforesaidwithholding tax regime will be "pass through" to the Power Purchaser. GeneralSales Tax and all other taxes will also be treated as a "pass through"

14. The Zakat deduction on dividends (currently @ 2.5%), as required to be deducted

under Zakat Ordinance, is to be considered as "pass through".

-15. Sindli Infrastructure Development Surcharge @ 0.850% of the imports for theProject has been assumed.

16. Federal Excise Duty has not been assumed as part of the Project Cost; in case thesame is required to be paid by the Project, the same should be treated as pass-through under the tariff.

17. The Return on Equity for the construction and commissioning period, shall beadjusted on IRR basis at the time of COD according to the actual Equitydisbursement during such period

18. The Power Purchaser / NTDC shall be exclusively responsible for the financingof construction , operation : ind maintenance of the interconnection andTransmission Lines as per the prevailing policy at the time of tariff determination

19. Main Energy meter and electronic recorder for continuous recording of readingswill be provided -by NTDC at it> own cost.

20. Financing Terms are as yet based on the initial discussion with the financialinstitutions and hence are subject to final negotiations once tariff has beendetermined by NEPRA and the EPA / IA are signed. This will include mainly thedebt-equity ratio, Grace Period and loan repayment term, benchmark index(LIBOR/KIBOR) and the spread margin of the financial institution.

21. Pre -COD insurance costs are considered based on the proposal received from toplocal insurance company . Premium rate for the insurance arrangements will befin.-lined at the time of financial closure.

22. No hedging cost is assumed 6r exchange rate fluctuations during constructionand all cost overruns resulting from variations in the exchange rate duringconstruction shall be included iii the Project Cost.

23. Project contingency and maintenance reserves are not included in ReferenceGeneration Tariff calculations. If req. iced by Lenders, these will be adjustedaccordingly in the Reference Generation Tariff.

24. Any other assumptions that an not expressly stated herein but are based on theEPA draft negotiated by the Project Company with the Power Purchaser.Consequently any change in any such assumptions may lead to change in the

Reference Generation Tariff,

25. The payments to Workers \Veltare Fund and Workers Profit Participation Fund

have not been accounted for in the Project budget and have been assumed to be

reimbursed at actual by the Power Purchaser.

^^ t` 83


26. Any incentives given to any other Wind IPP shall also be given to the ProjectCompany.

0 (1 't 84

SAPPHIRE \VIND POWER COMPANY LIMITED

12. TARIFF SUMMARY

TARIFF PETITION

In summation , the Project Company herewith most respectfully submits beforeNEPRA for its approval the matters set out in this Tariff Petition and further prays

for NEPRA to kindly approve the f1 )llowing:

12.1 The Project Costs and related arrangements stated in this Petition be allowed to the

Petitioner.

12.2 Energy production estimate of 138 .8 GWh for Year- 1 after COD and 140.9 GWh per

annum for calculation of the tariff and energy payments for the years 2 - 20.

12.3 The Power Purchaser be directed to make payment against Bonus Energy (energy

above the Monthly Benchmark Energy) on monthly basis.

12.4 The Project be allowed to claim compensation for energy supplied prior to COD at

the rate of tariff allowed by NEPRA for the first year minus the debt servicing

components.

12.5 Funding of the Project on a 75:25 - Debt: Equity ratio.

12.6 Debt to be split on 87.94°%: 12.06% foreign (LIBOR): local (KIBOR) basis.

12.7 LIBOR based debt financing by ICBC with a base rate equal to 6-Month LIBOR plus

a spread of 5.00% (including 1.00% for ADB REDSIP Guarantee), reasons for which

have been explained under Section 6.2 (Debt Senhin0 above.

12.8 LIBOR based debt financing by ECO Trade and Development Bank with a base rateequal to 6-Month LIBOR plus a spread of 4.50% (including 1 .00% for ADB REDSIPGuarantee), reasons for which have been explained under Section 6 .2 (Debt Servieinytabove.

12.9 KIBOR based debt financing (13.38"/o) with a base rate equal to 6-Month KIBOR plus

a spread of 3.00%, reasons for which have been explained under Section 6.2 (DebtFinanein& above.

12.10 Sharing of any CER related revenues subsequently realized, as per the Government ofPakistan policy.

12.11 A Return on Equity of 18°%o (net of 7.5% withholding tax) on IRR basis along withReturn on Equity during Construction Period, reasons for which have been providedin detail in Section 6 .4 (Equity) above.

12.12 Working Capital facility of PKR 85.50 million , to be adjusted at COD.

12.13 Indexations and adjustments for the individual tariff components , as detailed inSectionq9 (Indexation, : l i jrutmentr and Cori Escalations) above.

85


12.14 Insertion of Benchmark Energy "Table and Monthly Complex Power Curve as

Schedule 1 Annex 2 of the EPA, the same are provided under Sectio 1U.1 (Benchmark

Enema Q; Complex Monthly Power Cum, Tables) above.

12.15 The Reference Generation Tariff pro vided under Section 8 .2 (R ference Generation Tariff

Table) above along with individual tariff components and debt schedule provided

under Section 1.1 (Debt Schedule) above.

12.16 Adjustments at COD, as provided under Secdo 9.2 (Adjustments at COD) above.

12.17 The General Assumptions, as provided in Section, II l(GeneralA ssumptions).

Furthermore , given the advance stage of the Project, NEPRA is kindly requested to processthe Tariff Petition at the earliest thereby enabling the Project Company to proceed furtherwith the development process

5

^^ `^ }, 86

Government of PakistanAlternative Energy Development Board (AEDB)

3, Street No. 8, F-813, Islamabad.Tel: 92 51 9262947-50. Fax : 92 51 9262977

B/3/1/SWCPU07 a7 August 2011

Mr. Khalid AslamDirector ProjectsSapphire Wind Power Company Ltd.313-Cotton Exchange BuildingI.I.Chudrigar RoadKarachi.

Subject: PROVISIONAL APPROVAL OF FEASIBILITY STUDY

This refers to your communication dated August 26 , 2011 regardingthe subject cited above.

2. Alternative Energy Development Board (AEDB) is in receipt of therevised feasibility study of your wind power project . AEDB has initiated the reviewof the revised feasibility study. The approval of Feasibility study is linked with thefollowing milestones;

• Verification of Power Production Estimates from Risoe.• Approval of Grid Interconnection studies from NTDC• Approval of EIA/IEE Study from EPA, Sindh.

3. AEDB acknowledges that the IPP has already acquired thenecessary approvals of the Grid Interconnection study and IEE study from therelevant agencies. AED.B has initiated the process of verification of productionestimates through RISO. AEDB hereby, provisionally accepts the feasibility studyof the wind power project of M/s SWPCL. The final approval of the feasibility studyshall be accorded based on the verification of power production estimates byRISO. M/s SWPCL may however proceed ahead with the application of tariff toNEPRA.

(Syet "Ageel Hussain Jafri)Deputy Director (Policy)

101

317-C.fwn E-dav- 8..iWin9.ll. ct...th.w. Ro J, K 4 i-71000 Pakjr .

rh n . 92-71 -11 1-000.100Fm Y7,71.7416705 , 92.21-2117414

[.moll : kaod.i.dlk*lwpp&.. un,pk ,.. 11)ph i reSapphire Wind Power Company Limited

Ref: NTDC/OTS-I/2011August 9, 2011

To,Mr. Amjad Rana.Chief Executive officerNational Transmission and Dispatch Company Limited.WAPDA House,Shahrah-e- Quaid-c- Azam,Lahore,Pakistan.

vi

Dated !r.p^PJ010 C'0

Subject Offer to sill power by Sanohire Wind Power Co. Ltd. to National TransmissionAnd Dianatc\ Comrianr L(mltal (rots •It$ 493:MW d^•eewer rer+e_rrlloefacility to be located at Jhimoir. District Thatta. Sindb. Pakistan

Dear Sir,

We, Sapphire Wind Power Company Limited (SWPCL), refer you to the energy purchase agreement(the Energy Purchase Agreement) - to be executed between SWPCL and National TransmissionAnd Dispatch Company Limited (( through its Central Power Purchasing Agency) on behalf of ex-WAPDA Distribution Companies)) (the Power Purchaser) - relating to the SWPCL 49.5 MW windpower generation facility to be located at 7hlmpir, District Theta. Sindh, Pakistan (the Project).

It is humbly highlighted that pursuant to the section 8.2.1 of the Policy for Development ofRenewable Energy for Power Generation 2006 (the RE. PoUcy 2006), it is mandatory for the powerdistribution utilities to buy all electricity offered to them by renewable energy projects that areestablished in accordance with the provisions given in section 8.2.2 of the RE Policy 2006. Furthersince the Project is in accordance with section 8.2.2 of the RE Policy, section 8.2.1 will be applicableto it.

In view of the foregoing , SWPCL hereby offers for sale to the Power Purchaser the power to hegcuttaAcd through its Project pursuant to the terms of the Energy Purchase Agreement (the Offer ForSale ofPower).

We hope that SWPCL's Offer For Sale of Power to the Power Purchaser will enable the PowerPurchaser to meet its regulatory requirements relating to the purchase of power from the Project andlook forward to expeditious conclusion of such process . We thank you for your continuing support tothe development of wind power sector in Pakistan and to our Project.

Sincerely,For and on behalf ofSAPr111RE WIND POWER COMPANY LIMrreo

KIIAI.tu ASLAM

CC:Mr. Khadim Hussain Baluch , Chief Engineer, NTDC

1, fl r2

INTERVENTION REQUEST

PETITION FILED BY SAPPHIRE WIND POWER COMPANYLIMITED FOR DETERMINATION OF REFERENCEGENERATION TARIFF (CASE NO. NEPRA/TRF-187/SWPCL-2011)

Name/Address

Manner in which theintervener is likely tobe affected by anydetermination in the (*)proceeding.

Contention / Groundsof making the formalrequest

(*)Relief Sought (if any).

(*)Brief of evidence (ifany)

(*)Comments.

(*)

(*) Add additional Supplements if required

Date:Signature

To be accompanied with:1. An affidavit on stamped paper (sample attached), sworn before an authorized

officer.2. Intervention Request Fee

%-"il I KAN 1 3 Vr AV r i uA V I I

The affidavit to be submitted with any petition or communication where in any

statement of fact or opinion is made by the petitioner or the communicator, shall

be drawn up in the first person stating the full name, age, occupation and address

of the deponent and the capacity in which he is signing and indicating that the

statement made therein is true to the best of the knowledge of the deponent,

information received by the deponent and belief of the deponent, and shall be

signed and sworn before a person lawfully authorized to take and receive affidavit,

provided that, a communication filed during the course of a hearing may be

affirmed in person before the Authority by the person filing the same.

Where any statement in an affidavit given as per paragraph above is stated to be

true according to the information received by the deponent, the affidavit shall also

disclose the source of such information.

Tariff Petition of Sapphire Wind Power Company

Documents

Transcript of Tariff Petition of Sapphire Wind Power Company