WAPDA tariff hiked by 28%
The Rs1.16 increase would resolve pending hydel profit disputes with K-P
PHOTO: FILE
ISLAMABAD:
The National Electric Power Regulatory Authority (Nepra) has increased the bulk tariff of Wapda by Rs1.16 per unit to Rs5.27. The 28 per cent increase from the current rate of Rs4.11 would generate about Rs122 billion to pay Khyber-Pakhtunkhwa (K-P), Punjab, AJK, and the Indus River System Authority (Irsa) during 2017-18.
The payments relate to Net Hydel Profit (NHP) and Water Usage Charges (WUC) to be paid to K-P, Punjab and AJK against 21 projects. Irsa charges have been fixed at Rs0.005 per unit, besides variable charges for different projects.
According to Nepra determination, an MoU was signed between the federal government and the government of K-P for arrears under NHP. The MoU stipulated a recovery methodology wherein recovery of arrears would be undertaken in four instalments of Rs25 billion (for FY-2016) and Rs15 billion for 2017, 2018 and 2019 under a methodology that expressly departed from the Kazi Committee Methodology (KCM). Upon reviewing the matter, CCI, in its decision of February 29, 2016, gave its 'concurrence' to the MOU signed between the federal and K-P governments.
MCCI lambasts hike in electricity tariff
Subsequently, the CCI approved an alternative NHP in its decision of December 16, 2016, stipulating that "payment of NHP to the government of Punjab at Rs1.10 per unit on the analogy of government of K-P generated from Hydel Power Station located in Punjab for FY 2016-17 and onwards."
During the hearing, the K-P government objected to the CCI decision and "asked for deletion of the words ‘and onwards’ as these were temporary arrangements."
The CCI later amended its decision of May 2, 2017, by omitting the words "and onwards", creating further uncertainty regarding whether the approved methodology is interim or permanent in nature.
The issue of interpretation and application of the KCM has consistently risen in subsequent disputes and the CCI has continually departed from the mechanism in favour of alternative arrangements.
This suggests that the CCI regards the KCM as impractical.
NEPRA slashes power tariff by Rs1.82/unit for August
It is pertinent to mention that the authority, in its determinations for 2004, 2006, 2010, 2011, 2013 and 2015, maintained a consistent stance. All these determinations have attained the finality as no party has ever challenged them in court.
According to a CCI decision from December 16, 2016, Rs1.1/kWh as NHP is also applicable on Punjab-based power plants for payment to the province.
Nepra is allowing Wapda to operate 19 existing and build five new hydropower stations under one bulk supply licence since 2004. Wapda has been allowed to charge a single tariff that is based on the average cost of all the power stations and projects taken together. It must be appreciated that each existing power station has a different operation and maintenance cost which is financed through a distinct capital structure, i.e., debt and equity.
The National Electric Power Regulatory Authority (Nepra) has increased the bulk tariff of Wapda by Rs1.16 per unit to Rs5.27. The 28 per cent increase from the current rate of Rs4.11 would generate about Rs122 billion to pay Khyber-Pakhtunkhwa (K-P), Punjab, AJK, and the Indus River System Authority (Irsa) during 2017-18.
The payments relate to Net Hydel Profit (NHP) and Water Usage Charges (WUC) to be paid to K-P, Punjab and AJK against 21 projects. Irsa charges have been fixed at Rs0.005 per unit, besides variable charges for different projects.
According to Nepra determination, an MoU was signed between the federal government and the government of K-P for arrears under NHP. The MoU stipulated a recovery methodology wherein recovery of arrears would be undertaken in four instalments of Rs25 billion (for FY-2016) and Rs15 billion for 2017, 2018 and 2019 under a methodology that expressly departed from the Kazi Committee Methodology (KCM). Upon reviewing the matter, CCI, in its decision of February 29, 2016, gave its 'concurrence' to the MOU signed between the federal and K-P governments.
MCCI lambasts hike in electricity tariff
Subsequently, the CCI approved an alternative NHP in its decision of December 16, 2016, stipulating that "payment of NHP to the government of Punjab at Rs1.10 per unit on the analogy of government of K-P generated from Hydel Power Station located in Punjab for FY 2016-17 and onwards."
During the hearing, the K-P government objected to the CCI decision and "asked for deletion of the words ‘and onwards’ as these were temporary arrangements."
The CCI later amended its decision of May 2, 2017, by omitting the words "and onwards", creating further uncertainty regarding whether the approved methodology is interim or permanent in nature.
The issue of interpretation and application of the KCM has consistently risen in subsequent disputes and the CCI has continually departed from the mechanism in favour of alternative arrangements.
This suggests that the CCI regards the KCM as impractical.
NEPRA slashes power tariff by Rs1.82/unit for August
It is pertinent to mention that the authority, in its determinations for 2004, 2006, 2010, 2011, 2013 and 2015, maintained a consistent stance. All these determinations have attained the finality as no party has ever challenged them in court.
According to a CCI decision from December 16, 2016, Rs1.1/kWh as NHP is also applicable on Punjab-based power plants for payment to the province.
Nepra is allowing Wapda to operate 19 existing and build five new hydropower stations under one bulk supply licence since 2004. Wapda has been allowed to charge a single tariff that is based on the average cost of all the power stations and projects taken together. It must be appreciated that each existing power station has a different operation and maintenance cost which is financed through a distinct capital structure, i.e., debt and equity.