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Electricity consumers to pay additional Rs70 bn in four years

By Khalid Mustafa
May 27, 2016

ISLAMABAD: The end consumers of electricity will pay the additional amount of Rs70 billion in four years time till financial year 2018-19 to enable Wapda to pay net hydel profit (NHP) to Khyber Pakhtunkhwa. To this effect, Napra has given its determination on May 25, 2016 that has factually jacked up the tariff of hydro generation by Rs1.25 to Rs4.05 per unit.

Nepra has forwarded the determination to the federal government for notification in the official gazette under section 31(4) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 which will be in furtherance to the already notified tariff vide notification No. 191(I) 2016, dated March 07, 2016.

The consumers will pay Rs40 billion in 2016-17 in the shape of increase in hydro generational tariff by Rs1.25 per unit and Rs15 billion as increase in tariff by Re0.46 per unit each in next two financial years 2017-18 and 2018-19. The power regulator has taken the decision of increasing the tariff keeping in view the decision by the CCI about the payment of Rs70 billion to KP.

Wapda will pay the NHP to KP on the electricity of over 17 billion units generated from nine hydropower stations situated at Tarbela, Warsak, Duber Khawar, Allai Khawar, Khan Khawar, Jabban, Dargol, Kurram Garhi and Chitral.

However, the regulator has disallowed the passing of debt servicing cost of Rs1.875 billion to the end consumers on the loan of Rs25 billion borrowed by Wapda on the instruction of the Ministry of Water and Power. Wapda acquired the loan of Rs25 billion from banks with 7.5 percent interest rate to pay the NHP to KP in current financial year 2015-16. Nepra rejected the debt servicing by the end consumers arguing that the CCI is the right forum to decide the NHP payment and its servicing cost.

Wapda had earlier submitted new petition with Nepra seeking the approval of revised supplementary tariff of Rs3.1 per unit to pay the NHP of Rs51.173 billion which also includes the previous arrears of Rs15 billion for next financial year 2016-17.

The total amount of NHP arrears payable to KP had been reconciled at Rs70 billion between KP and the federal government. The said amount was to be paid to the said federating unit in yearly instalments and as per the CCI (Council of Common Interests) decision, the Rs25 billion amount is to be paid in current financial year 2015-16 and Rs15 billion each in next three years.

However, NHP for current financial year amounting to Rs9.298 billion which could not be recovered from consumers in the wake of delayed notification, if included, then the total arrears stand at Rs79.298 billion. And the said mammoth amount will be recovered from consumers by end of financial year 2018-19, Wapda pleaded.

In the petition, Wapda had mentioned that it will borrow the loan of Rs25 billion at the interest rate of 7.5 percent to be paid to KP by end of June 30, 2016. The interest rate on the huge amount has been worked out at Rs1.875 billion and it will be the consumers who will also be punished for the sins they did not commit.

In support of the CCI decision, the ECC in its last meeting also allowed Wapda to arrange Rs25 billion as loan from local banks under the federal government’s sovereign guarantee to make payment of arrears for NHP to KP during the outgoing financial year 2015-16.

However, Wapda narrated that the arrears out of Rs79.298 billion in the head of NHP to be paid to KP till the end of next financial year stand at Rs51.173 billion for which consumers will pay Rs3.1 per unit. In the petition, Rs51.173 billion to be paid to KP includes Rs25 billion with interest of Rs1.875 billion as past arrears which are to be paid to the province in current financial year 2015-16, Rs9.298 billion as the arrears for current fiscal which Wapda could not recover from consumers because of delay in the notification and the amount of Rs15 billion also as past arrears which are to be paid to KP in next financial year 2016-17.

That’s why Wapda had clubbed previous arrears and current payables to KP in financial year 2015-16 and 2016-17 in the petition.