03 May 2004	Monday	12 Rabi-ul-Awwal 1425

ISLAMABAD, May 2: The National Electric Power Regulatory Authority (Nepra) has sought policy guidelines from the federal government over net hydel profit to Punjab, Azad Kashmir and the NWFP on electricity generated in their respective areas , Dawn has learnt.

"Unless we have a clear picture of whether or not Punjab and the AJK would be given hydel profit and what would be its size, Nepra cannot move forward on the tariff of hydel stations as well as consumer tariffs," a Nepra member told Dawn.

He said that Nepra had written to the government to give a clear-cut policy on the subject. He said the issue should have been resolved by the Council of Common Interests (CCI) under the Constitution but in the absence of this body, an advice has been sought from the federal government.

Punjab and Azad Kashmir are new hydel profit seekers on power generated in their areas but its size remains unspecified and needs to be agreed upon by the federal government, Wapda and other stake-holders.

Wapda has been paying about Rs6 billion per annum to the NWFP as hydel profit on Tarbela Dam since reaching a water accord in 1991 under the AGN Kazi formula, but the issue has again become contentious.

The NWFP is demanding an increase in it and has claims of about Rs345 billion against Wapda. A five-member arbitration committee is in the process of being constituted to resolve the Wapda-NWFP dispute over the subject.

The immediate question faced by Nepra is that it has to set tariffs of various generation and distribution companies operating in the country, and that hydel power is a major factor in tariff setting with the country's thermal and hydel mix of about 70:30.

On the basis of this 30 per cent hydel power generation, net hydel profit is calculated and made part of consumer tariff. Punjab is seeking hydel profit from six power stations, including the recently-completed 1450-mw Ghazi Barotha power project and Chashma power project.

The federal government has already signed an agreement with Azad Kashmir to provide hydel profit on account of Mangla Dam. Wapda has already sought more than 500 per cent increase in hydel power tariff through a formal petition before the National Electric Power Regulatory Authority (Nepra).

The revised tariff for supply of hydroelectric power by Wapda to the National Transmission and Dispatch Company (NTDC) would then be passed on to consumers. Wapda has demanded a tariff of Rs1.169 per unit (Kwh) which is 5-6 times higher than the prevailing average tariff for hydel power plants.

The cost of hydel power production is below 13 paisa per unit at Mangla and Tarbela power stations while it comes to 58 paisa per unit at the newly constructed Ghazi Barotha Hydropower Project.

Moreover, Wapda has also demanded the entire tariff in the form of capacity price at the rate of Rs525 per kilowatt which would cost NTDC about Rs22 billion per month. These sources said that Mirza Hamid Hassan, the head of the task force on power tariff, has told the government that the proposed increase in tariff would put "an unjustifiable burden on consumers" at a time attempts were being made for tariff reduction.

"The proposed tariff arrangement is absolutely undesirable and highly detrimental to consumer interest as it would take away the advantage of cheap hydel power and raise the average tariff considerably," a senior official quoted the task force chairman as writing to the government.

The sources said that if the concept of capacity payment was introduced, the consumers will have to pay for the total capacity for the whole year while verylittle hydel power would be actually available during winter months when water availability is low.

Under the donor-funded power sector restructuring plan currently being implemented, the NTDC will be required to pay separate tariffs to generation companies for the purchase of electricity and then it would charge an average tariff to the distribution companies which would be finally recovered from the consumers.

All the generation companies, NTDC and distribution companies have filed their tariff petitions before Nepra which awaits a policy decision from the federal government to announce their separate tariffs. Nepra was required under the World Bank deadline to announce its determinations on these petitions latest by December 31, 2004.