December 10, 2001	Monday	Ramazan 24, 1422

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ISLAMABAD, Dec 9: The provincial governments have exempted 12 corporate companies of Wapda from all provincial taxes and duties with effect from Dec 1, 2001, a senior power ministry official told Dawn on Sunday.

In return, these companies would compensate provincial governments by providing electricity to streetlights at SCARP rates instead of existing higher rates.

“All the provincial governments have issued respective notifications to this effect,” the official said.

In this way, over a year-long dispute between Wapda’s companies and provinces has come to an end that would enable the government to transfer its shares in Wapda assets to 12 distribution and generation companies for onward privatization, the official said.

Of late, the provincial governments had agreed to provide duty and tax exemption to Wapda companies against domestic rates for streetlights but the billing turned out to be more than old rates for streetlights because of higher slab consumption.

The provincial governments then withheld the notifications for tax exemptions and took up the whole issue afresh with Wapda and sought electricity at SCARP rates.

Wapda and Private Electric Power Company had informed the federal government that unless tax exemptions were granted, transfer of Wapda assets to 12 companies would not be possible.

Tax exemptions to corporate companies of Wapda was one of the few remaining conditionalities for completion of about one billion dollar corporatization process co-financed by the Asian Development Bank and the World Bank.

Under the agreed matrix of the covenant, the whole corporatization process has to be completed before the cut-off date of Dec 31, 2001.

Finance Minister Shaukat Aziz had held a meeting with provincial finance ministers late last month and asked them to issue tax exemption notifications immediately.

Wapda’s shares were transferred in the name of the President of Pakistan last year from Wapda itself following a number of reminders from the World Bank.

The unbundled corporate companies include eight distribution companies (Discos), three generation companies (Gencos) and a National Transmission and Dispatch Company (NTDC) and have been registered independently under the Companies Ordinance, 1984.

These sources said that transfer pricing and financial modelling exercise has been completed and discussed with the World Bank by Wapda but the two issues were required to be finalized and okayed by Nepra.