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| May 16, 2005 | Monday | Rabi-us-Sani 7, 1426 |
Concern over violation of tariff fixed by Nepra
ISLAMABAD, May 15: The World Bank has expressed serious concern over inordinate delay in the corporatisation of the Water and Power Development Authority (Wapda) and violation of the tariff fixed by the National Electric Power Regulatory Authority (Nepra). Water and power ministry sources said the World Bank, which has been funding power-sector reforms since 1985 and plans to provide another $1.5 billion in the coming years, has taken a very strong position on the subject.
They said Prime Minister Shaukat Aziz has convened an emergent meeting on power sector reforms here on Monday on the special request of the World Bank. The meeting would be attended by the minister and senior officials of the water and power ministry, chairman Nepra Lt-Gen (R) Saeed-uz-Zafar, World Bank’s country representative John Wall and chairman Wapda Tariq Hameed and his team.
The WB, the sources said, was not satisfied with the pace of corporatisation, particularly separation of Pakistan Electric Power Company (Pepco) from Wapda and shifting of its offices to Islamabad, appointment of Pepco chief executive, appointment of independent and private sector board of directors of the corporate companies, separation of their tariffs and non-implementation of Nepra determinations for the last one year.
The sources said Pakistan had given a commitment to the WB to complete the corporatisation process so as to make all the companies financially independent by December 31, 2004. The Pepco is currently run by Wapda officials.
The deadline, however, could not be beaten and the bank was asked to extend it till June 30, 2005. The sources said the WB believed that Wapda authorities were dragging their feet and the situation suggested the process could not be completed for another three years.
The sources said non-implementation of Nepra determinations suggested that the companies had not been able to reduce their transmission and distribution losses despite financial injections and the government was helping Wapda companies to meet cash shortfalls by keeping their tariffs artificially high in violation of the Nepra Act, 1997.
The WB is of the opinion that foreign investors could not have confidence in power sector regulatory regime in Pakistan when its local stakeholders, particularly consumers, were loosing confidence due to non-implementation of Nepra’s tariff determinations. The bank has also informed the government that it was concerned about inability of the power companies to meet targets set under the financial improvement and recovery plans that were necessary for making them self-sufficient.
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