Hydroelectric power: WAPDA seeks tariff increase to collect Rs51b

Money to be recovered from consumers, will be used to settle K-P’s net profit arrears

ISLAMABAD:

The Water and Power Development Authority (Wapda) has sought an increase of Rs1.5 per unit in hydroelectric power tariff in an attempt to collect Rs51 billion from consumers for onward payment to the Khyber-Pakhtunkhwa government to settle its net hydel profit arrears.

Wapda made the request in a supplementary tariff petition filed to the National Electric Power Regulatory Authority (Nepra), which held a public hearing on Thursday, with calls of disapproval of the proposal from relevant stakeholders.

The demand for tariff increase came in the wake of a directive of the Council of Common Interests (CCI) - an inter-provincial body that has representatives from all provinces. Nepra reserved its judgment on the request.

The petition was filed following the signing of a memorandum of understanding by Water and Power Minister Khawaja Muhammad Asif, Finance Minister Ishaq Dar and Khyber-Pakhtunkhwa Chief Minister Pervez Khattak on February 25 and its subsequent approval by the CCI on February 29.

Nepra was told that the proposed increase in hydroelectric power tariff would push up average tariff by 55 paisa per unit.

In line with an agreement between the federal and K-P governments, which was also approved by the CCI, Wapda would clear K-P’s net hydroelectric power profit amounting to Rs70 billion over four years.

According to Wapda representatives, the authority has to pay arrears of Rs51 billion to K-P, therefore a new tariff of Rs3.01 per unit should be approved for collecting a higher amount from the consumers.

Wapda told the regulator that the federal government had recommended the authority to borrow Rs25 billion from banks and add Rs1.875 billion as mark-up before recovering first installment from the consumers in the current fiscal year.

Wapda further said it had to pay Rs15 billion to K-P next year on account of net hydroelectric power profit.

Representatives of the All Pakistan Textile Mills Association (Aptma), who were present during the hearing, opposed any increase in hydroelectric power tariff, saying the burden of tariff rise should not be passed on to the consumers. The tariff was already high and a further hike would add to consumer woes, they said.

They pointed out that the government was already receiving Rs41 billion from the consumers as tariff rationalisation charge and wanted to put an extra burden of Rs70 billion by pushing up the hydel tariff.

The federal government should pay from the national kitty and refrain from burdening the consumers, they suggested.

In November 2015, Nepra had approved about 217% increase in net hydel profit of K-P while increasing the price of cheaper hydroelectric power by around 16%. As a result, K-P will now be entitled to around Rs18 billion net hydel profit per year compared to Rs6 billion earlier.

Published in The Express Tribune, May 6^th, 2016.

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