KP to once again seeks NHP under KCM mode

August 04, 2020

CCI meeting on Aug 6Wapda to pay Rs180 per year to KP in case of approval by CCI; KP currently getting Rs20b as NHP; Punjab to get Rs79b per year against current profit of Rs15b Khalid...

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CCI meeting on Aug 6

Wapda to pay Rs180 per year to KP in case of approval by CCI; KP currently getting Rs20b as NHP; Punjab to get Rs79b per year against current profit of Rs15b Khalid Mustafa ISLAMABAD: The KP government will once again seek payment of Net Hydel Profit (NHP) under Kazi Committee Methodology (KCM) as per the AGN Kazi formula in the August 6 meeting of Common Council of Interests. In case of approval by the CCI, Wapda, which is one of the most affected victims of circular debt, will have to pay Rs180 per year to the KP government, which is currently getting Rs20 billion as NHP. Punjab that is getting Rs15 billion per annum as NHP will get Rs79 billion under KCM mode and this is how the tariff of 33 billion units per annum procured through hydro generation per annum will hike to close to Rs13 per unit from existing tariff of Rs5.32 per unit. This is how the myth that hyderogeneration is the cheapest one will stand nowhere rather it will also cause massive spike in basket price of power tariff. According to well-placed sources in the Water Resources Ministry, If the KP government is paid annually Rs180 billion, then the cost of 33 billion units procured through hydro generation will increase from Rs5.30 per unit to close to Rs10 per unit. If the Punjab government is also paid Rs79 billion under KCM mode, then hydro generation tariff will further increase by Rs2.50 per unit to close to Rs13pr unit which will be more than that of many thermal power houses. As per data available with The News, Wapda’s receivables have increased to Rs211 billion which are not being paid by CPPA (Central Power Purchase Agency) because of the circular debt that stands at Rs2.219 trillion. Owing to this very fact, Wapda has no fiscal space enough required to usher in the big projects on its own which is why it is bound to generate liquidity through commercial loans. And to this effect, the KP government in the 42 meeting of CCI scheduled on August 6 will plead its case seeking implementation of Kazi Committee Methodolgy (KCM) for calculations of Net Hydel Profit. KP wants to get legal cover of KCM mode and wants Wapda to provide commitment for payment of NHP under KCM mode. Sources at the Water Resources Ministry told The News that Punjab is also carefully looking at the move of KP and will follow suit if CCI approves the Kazi Committee Methodology mode to calculate Net Hydel Profit. If Punjab is also paid under KCM mode too, then it will get Rs79 billion annually against Rs15 billion per annum in the head of NHP. The NHP is payable to the provinces as per Article 161-2 of the Constitution of Pakistan, which states that the net profit earned by the federal government or any undertaking established or administered by the federal government from the bulk generation of power at a hydro-electric station shall be paid to the province in which the hydro station is situated. And to develop a method for the calculation of the NHP, a committee was constituted on November 24, 1986 under the chairmanship of A.G.N Kazi, then the deputy chairman of the Planning Commission. Federal finance secretary, additional secretary for water and power and KP finance secretary were members of the committee. It submitted its report to the government and it was approved by the CCI in a meeting held on January 12, 1991, for the past and future calculations of the NHP. Then, the president issued a presidential order in support of the CCI decision, directing the federal government to guarantee payment of the NHP to the provinces. Based on the AGN Kazi committee formula, the NHP of KP for the year 1991-92 was calculated at Rs 0.21 per kilowatt-hour and the total amount became Rs6 billion for that year.

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