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September 24, 2018

KP seeks net hydel profit as per AGN Kazi formula


September 24, 2018

ISLAMABAD: Khyber Pakhtunkhwa wants the implementation of AGN Kazi formula for net hydel profit and if the demand is met by Council of Common Interests (CCI), electricity consumers will have to pay Rs3-4 per unit as net hydel profit.

In this way, the cost of hydro generation will go up close to Rs10 per unit which is the one unit cost of electricity of many Independent Power Producers (IPPs), a senior official of Water Resources Ministry told The News.

To be chaired by Prime Minister Imran Khan, and attended by chief ministers of four federating units, the CCI will figure out the net hydel profit issue in the light of AGN Kazi Formula as demanded by KP government.

According to the senior mandarin of the ministry, a committee on AGN Kazi formula headed by law minister will present its update on the issue. The official said that in case KP demand is honoured, the cost of one unit of hydro power will increase up to Rs10 per unit which is the cost of thermal electricity being produced by most of the IPPs.

Currently the electricity consumers are paying Rs1.10 per unit as NHP and in case of implementation of AGN Kazi formula, they will have to pay Rs3-4 as NHP on one unit of hydro generation. He said that it is high time to revisit the NHP policy. Net hydel profit is currently being treated as capacity charges of hydro power plants.

The consumers have so far paid net hydel profit of Rs149 billion to KP and Punjab government out of which Rs94 billion has been paid to KP and Rs55 billion to Punjab.

Collecting NHP from consumers is unconstitutional as under the Constitution, clause 2 of Article 161-162 clearly says, “Net profit shall be computed by deducting from the revenue accruing from the bulk supply of power from bus-bars of a hydro-electric station at a rate to be determined by the CCI, the operating expenses of the stations shall include any sums payable as taxes, duties, interests or return on investment and depreciation and element of obsolescence, and over-heads, and provisions for reserves. “

This means, the official said, that NHP has to be paid from the profit of the Wapda, but since Wapda is no more profit making entity so it is compelled to borrow billions of rupees from commercial banks to pay NHP to Punjab and KP and the consumers are paying in this head against the loans Wapda has taken. More importantly consumers are also paying in the head of debt servicing against loans of Wapda managed for paying NHP.

So the whole burden is on electricity consumers. If this kind of status quo continues, the cost of hydro generation will no more be cheaper, rather it will be equal to the unit cost of electricity being produced by IPPs.

In to-to consumers will pay in 2018-19 the huge amount of Rs650 billion as capacity charges of all kinds of powerhouses that our system has as the installed capacity of the country to generate electricity has jacked up to over 30,000MW.

Out of Rs650 billion capacity charges, consumers will have to pay Rs180-200 billion as net hydel profit in current financial year if 2018-19.

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