May 24, 2002	Friday	Rabi-ul-Awwal 11,1423

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LAHORE, May 23: The Water and Power Development Authority’s demand for tariff increase is “not justified at all” the Institution of Electrical and Electronics Engineers Pakistan has told the National Electric Regulatory Authority.

The Nepra had sought expert opinion from IEEEP on Wapda’s tariff revision plea seeking 24.67 per cent or 88-paisa per unit tariff increase. The IEEEP pointed out in its letter that the Wapda had failed to cut line losses, improve revenue collection and reduce its operational costs. The Institution said it was astonishing to note that the Wapda had submitted the petition under review, instead of taking requisite measures to improve its working. It was even more surprising, it said, that the Wapda had not achieved real progress under any of these heads.

Tariff increase demanded by the Wapda, the letter said, would only create problems and increase theft of electricity.

In its parawise comments, the IEEEP pointed out that according the Wapda’s annual reports, in the last four years there had been only 1 per cent reduction in line losses from 26 per cent in 1998 to projected 25 per cent during the current year. Had there been a real reduction, of say 2.5 per cent, the Wapda could have saved Rs16 billion over the period. Technical losses in Wapda’s power system have, in fact, increased due to overloading and poorly maintained transmission and distribution system. The Institution described this as criminal neglect. It said claims of reducing line losses from 42 per cent to 25 per cent had no authenticated basis.

The recovery of arrears, running as well as old, the letter said, was not satisfactory. As a result receivables had increased by almost Rs6 billion — from Rs44 billion to Rs50 billion. The level could have been much higher had it not been for a Rs18 billion write-off in 2000-2001. Arrears against private consumers had increased from Rs13.7 billion to Rs20.7 billion in March 2002. By comparison, the Wapda’s estimated loss for the current year, for which tariff revision has been sought, is only Rs15.1 billion.

The revenue collection is expected to increase from Rs123.8 billion (in the year ending on June 30, 1999) to Rs159.8 billion (in the year ending June 30, 2002) — an increase of 28.6 per cent. In view of the system load growth of 15.2 per cent and the minimum tariff increase of 20.4 per cent, the increase should have been at least 35.6 per cent. This proves, the letter claims, that in real terms revenue collection went down by seven per cent and that line losses have not been controlled.

Meanwhile, the Wapda’s operating expenses went up by 104 per cent — from Rs85.6 billion to Rs174.4 billion from 1998-99 to 2001-2002 and payment to independent power producers increased by 156 per cent — from Rs42.5 billion to Rs108.7 billion.

Power purchase from the IPPs went up to 23.916 billion units from 15.151 billion units — an increase of 8.765 billion units. Power generation by Wapda’s own installations costs an average of around Rs1.54 per unit and the purchase from IPPs about Rs4.54. The IEEEP asserted that IPPs had been paid an additional Rs26.8 billion on account of Wapda’s inefficiency and closure of own powerhouses.

Wapda’s losses, the letter said, could easily be recovered through a 2.5 per cent reduction in line losses (Rs4 billion) and recovery of 75 per cent of the private sector arrears.

The Nepra, the letter said, was the best judge, but technically speaking, the IEEEP would not recommend any tariff increase unless a visible improvement was shown by the Wapda in the above-mentioned areas.