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Monday July 22, 2024

Net hydel profit: KP seeks Rs21bn from Nepra

By Khalid Mustafa
August 25, 2022

ISLAMABAD: The Khyber Pakhtunkhwa government has sought from the National Electric Power Regulatory Authority (Nepra) over Rs21 billion as five percent indexation from 2015-16 to 2021-22 over the existing net hydel profit of Rs1.10 per unit in power tariff till the final decision by the Council of Common Interests (CCI).

The five percent indexation means that legitimate consumers will pay an additional Rs5 billion per annum to the KP government other than paying the net hydel profit. And if the five percent indexation for Punjab is also added, consumers will have to pay Rs2 billion extra. This means the five percent indexation will cost Rs7 billion to consumers.

The KP government built its case based on the CCI minutes. The Nepra and Punjab government representatives during the hearing on the issue held Wednesday refused to subscribe to the KPK demand, saying there was no CCI decision in black and white on continuation of five percent indexation of over Rs1.10 per unit as NHP.

The Nepra chairman, however, said that the authority was supposed to report to the CCI under the law, as it was the forum to take a decision on the issue in clear words, adding that if it gives a go-ahead, the regulator will not hesitate to approve five percent indexation over NHP rate of Rs1.10 per unit to both KPK and Punjab.

The Nepra had earlier extended to KP five percent indexation over NHP rate for six months as an interim order from the CCI. The CCI had asked the KP government to move a summary to it for final decision, but this had not happened.

KP Finance Minister Taimur Saleem Khan Jhagra, along with the top man of PEDO and senior officials, represented the case and asked for continuation of five percent indexation over Rs1.10 NHP per unit. The KPK government submitted a modification petition in the matter of Nepra decision dated Aug 23, 2021, regarding Wapda hydroelectric tariff petition for the financial year 2020-21.

The KP government in its petition prayed that an instant modification petition be admitted and asked the Nepra to allow the annual indexation at five percent to KP with effect from and after FY2015-2016. It also requested that the authority may allow the indexation of the NHP and past payments made as a result of the application of five percent indexation should not be adjusted by Wapda being past and closed transaction.

It also demanded that the authority may allow the indexation of the NHP and past payments made as a result of the application of five percent indexation should not be adjusted by Wapda as the indexation of the NHP had been agreed by the federal government and duly approved and concurred by the CCI. The petitioner asked the Nepra that NHP payable to the KP be increased to Rs1.404 per kwh.

The petition also asked that NHP for the Gomal Zam Dam along with arrears for the year 2018 and onwards were allowed to Khyber Pakhtunkhwa.

The KP through its legal counsel had filed a motion of leave for review April 30, 2021, against the determination, challenging disallowance of NHP rate indexation on the grounds that the CCI had already approved such indexation. Therefore, the matter of five percent (5%) NHP rate indexation be considered while making Nepra determination. The Napra had held review proceedings July 14, 2021.

The Nepra through review determination dated Aug 23, 2021, accepted the KP’s plea on an interim basis by allowing indexation at five percent (5%) for a period of six months along with arrears subject to CCI guidelines on the issue of NHP and indexation and decided that KP shall approach the CCI to obtain clear guidelines on the issue of NHP and indexation (if any) within six months of notification of this decision and till such time, ‘NHP Regular’ rates as stated shall be applicable.

In case the petitioner failed to obtain an explicit decision of the CCI on NHP and its indexation (if any), the NHP Regular shall be paid at Rs1.10 per kwh to the hydropower plants other than Mangla. In case, the petitioner failed to obtain an explicit decision from the CCI on NHP, no payment shall be charged on this account. However, for Gomal Zam HPP, NHP arrears shall be paid at Rs454.646 per kwh per month.

It is pertinent to mention that earlier the Nepra had determined tariff for Wapda Hydroelectric for FY2015-16 and allowed NHP payable to KP at Rs1.10 per kwh together with five percent (5%) annual indexation as an interim arrangement. In pursuance of the said determination, an MoU was inked between the GoP and GoKP on Feb 25, 2016, which was endorsed by the CCI on Feb 29, 2016.

The CCI, while giving concurrence to the MoU, directed Wapda to file a tariff petition as agreed in the MoU. The MoU stated that the uncapped NI-IP as determined and transmitted from Nepra would be notified by the Ministry of Water and Power immediately. The uncapped NHP as determined and transmitted from the Nepra included the five percent (5%) indexation of the NHP rate for the FY2015-2016. However, in subsequent tariff determinations of the Wapda Hydroelectric, the NHP rate was not indexed.