December 3, 2001	Monday	Ramazan 17, 1422

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ISLAMABAD, Dec 2: The Wapda has decided to challenge the tariff of Chashma Nuclear Power Plant (Chashnup) fixed by the economic coordination committee of the cabinet, causing it an additional annual loss of Rs3 billion.

“The decision is unilateral, irrational and unfeasible. We have decided to approach a higher forum to get it rescinded,” said a senior Wapda official. The Wapda would seek intervention of the president to take up the matter at the federal cabinet level for a just and equitable solution, said the official.

The ECC meeting, presided over by Finance Minister Shaukat Aziz early this week, fixed Rs3.15 per unit tariff for purchase of electricity from 325-MW Chashnup with retrospective effect from January 1, 2001.

Earlier, the Wapda was paying Rs2.10 per unit to Pakistan Atomic Energy Commission (PAEC) for power purchase from Chashnup since the project came into operation early this year. The differential between Rs2.10 and Rs3.15 per unit fixed by the ECC for this period has so far amounted to Rs2.6 billion, the Wapda official said.

“We are suggesting measures to the federal government for savings so that power tariff could be kept at a reasonable level but instead of those practical adjustments, the finance ministry was putting additional burden on the utility,” deplored the Wapda official.

He said that Wapda was not taken into confidence about tariff fixation of Chashnup through circulation of a proper summary. “In fact we were asked to send a technical officer to attend an ECC meeting on Chashnup without informing that it was an important tariff issue that was going to eat our revenues for decades,” said the official, adding that obviously this would become part of the consumer tariff.

The dispute has emerged because there is nothing available with Wapda on paper about the financial cost of Chashnup though the unofficial total cost is estimated at $600 million.

The PAEC had informed the government that Chashnup’s loan servicing was not possible at Rs2.10 per unit tariff earlier being paid by the Wapda. It proposed that either the tariff be increased or its loan taken over by the federal government.

Since the Finance Division could not waive the loan, it went for the easy option of increasing the tariff, the Wapda officials said. In the ECC, the Wapda was represented by Secretary Water and Power Mirza Hamid Hasan, who, the Wapda officials said, was not aware of the real picture and technical issues.

The Wapda officials believe that the ECC is not a competent forum in the first place to fix power tariffs since this job has now been assigned to National Electric Power Regulatory Authority under Nepra Act, 1997. The Nepra has already started issuing licences to distribution companies, small power producers and generation companies.

“If we treat Chashnup as an IPP, then it has to sit with power purchaser (Wapda) under the law and negotiate a tariff based on capital cost and energy cost through audited accounts and then sign an MoU. This tariff has to be then approved by the Nepra. The ECC has nothing to do with all this,” said the official.

These officials said the Chashnup Power was not reliable like independent power producers (IPPs) and Wapda’s own power plants and remained unpredictable throughout the year and required long maintenance periods.

Also, they claim it did not fall under the economic despatch order because its tariff was in lump sum and did not contain capacity and energy component like other plants because the capital cost of the project was unknown to the power purchaser — Wapda.

Enlarging on the point, the official said, the Wapda’s load despatch order is based on energy cost and not the capacity payment. This meant that the Wapda preferred power from plants whose energy cost was cheap, whether it was from its own thermal or hydel plants or IPPs.

A senior power ministry official admitted that a summary on Chashnup’s tariff increase was submitted by the finance ministry and not the power ministry. He, however, did not agree with the proposition that the ECC decision was unilateral or arrived at without informing the Wapda. He said the utility’s point of view was not entertained by the ECC.

The official said the ECC decisions were taken with consensus and said he was unaware whether or not Wapda was challenging the ECC decision.

He also did not agree with Wapda’s notion that tariff issues did not fall under the ECC’s ambit since the Nepra was fully operational, saying the Chashnup was “a special case” and would not even require a generation licence under the Nepra Act, 1997.