November 21, 2001	Wednesday	Ramazan 5, 1422

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ISLAMABAD, Nov 20: Wapda is seeking at least 10 per cent (37 paisa per unit) increase in electricity tariff with effect from Dec 1, 2001, provided that a major chunk of its Rs35.2 billion total cash deficit is met by the government.

Wapda chairman Lt-Gen Zulfiqar Ali Khan said at a news briefing here on Tuesday that Wapda was faced with an estimated cash deficit of Rs35.2 billion and wanted 10 per cent or 37 paisa per unit average increase in the tariff to yield Rs9.6 billion.

He said he would be making a presentation before the chief executive about the steps the government should take to meet the remaining deficit of Rs25.6 billion.

The package envisages (i) Rs15.5 billion relief through conversion of Wapda’s debt-service liability (DSL) into federal government’s equity, (ii) Rs3.8 billion through reduction in gas prices at par with fertilizer rates, (iii) Rs3.2 billion through provision of additional 150 MMCFD of gas quota (iv) Rs1.2 billion through reduction in subsidies to FATA, agriculture and Balochistan (v) Rs0.9 billion through purchase of fuel from Parco and Attock Oil Refinery (ARL) instead of PSO in Karachi and (vi) the remaining one billion rupees would be absorbed by Wapda itself. All these measures are required to be put in place on Dec 1, 2001.

When asked what the required tariff increase would be in case the proposed measures were not approved by the government, the chairman did not give a specific answer, saying that it was one scenario and there could be more than one options.

He criticized the government decision of deregulation of furnace oil import, and said when Wapda had made arrangements for importing the oil through Keamari, the ministry of petroleum and natural resources had issued a notification to impose $4.448 per ton surcharge so that there was no price differential between Keamari and Port Qasim.

Wapda utilized 2.5 million tonnes of furnace oil and if the fuel consumed by independent power producers (IPPs) was also included, the total fuel consumption amounted to four million tonnes, he said.

The Wapda chief also criticized collection of general sales tax and withholding tax through electricity sales, saying that Wapda had collected Rs23 billion on behalf of the central board of revenue.

No where in the world taxes were collected through utilities, he said, adding that the GST and the withholding tax collected by Wapda amounted to 25 per cent of the total collection under that head by the federal government.

“This is not a prudent policy but this is for the common man to agitate”, said the chairman, adding that if the GST was not collected through Wapda, the electricity rates could come down by 15 per cent straight away as the consumers did not know what the electricity price was and what the taxes were.

He took a strong exception to Nepra decisions, saying that the automatic fuel price adjustment formula as a pass through mechanism was not being implemented and tariff increases were granted irrationally by Nepra. “There was no justification given and no calculation done while approving 11 paisa per unit increase last month.”

He said Wapda’s distribution companies were not issued licenses and instead small power producers (SPPs) were given licenses allowing them distribution rights in the exclusive territory of Discos. As a result, he added, Wapda’s Discos would be left with only loss-bearing consumers, like FATA, AJK, agriculture tubewells and domestic, if SPPs were allowed to have captive industrial consumers.

The general said Nepra was charging unreasonable fee of Rs2.5 million from the Discos for licences and tariff petitions while it had failed to understand the futuristic two-part tariff structure.