ISLAMABAD, Nov 28: The federal government has decided in principle not to increase power tariff for Wapda consumers, it has been learnt. Finance ministry sources told Dawn on Monday that the government was considering taking appropriate action against Wapda for not passing on an average Rs20 billion annual subsidy to its distribution companies over the last few years.
The government has reached the conclusion that a power tariff increase would negatively impact the overall growth momentum and push up inflation, the sources added.
This has been endorsed by favourable financial results of almost all the distribution companies of Wapda through a comprehensive accounting and auditing exercise spearheaded by the finance ministry in consultation.
The sources said that a majority of distribution companies of Wapda had been running into losses over the last few years and the government had to increase power tariff.
On the basis of old balance sheets, the National Electric Power Regulatory Authority (Nepra) had estimated the tariff to go up by an average 2.5 per cent.
The tariff for Quetta, Peshawar, Hyderabad and Multan had been estimated to increase by more than five per cent and the government had estimated Rs33 billion subsidy to keep their prices on a par with Islamabad, Lahore, Faisalabad and Gujranwala distribution companies.
After a thorough analysis of the balance sheets of Wapda and its distribution companies in consultation with Nepra and the ministry of water and power, additional secretary of finance Asif Bajwa concluded that Wapda had not been passing on the federal government subsidy to distribution companies.
A finance ministry official told Dawn all the stakeholders reached the conclusion that Wapda was intentionally withholding government’s subsidies and equity injections to delay freeing up of these companies. The Wapda authorities later confirmed the financial ambiguity and agreed to transfer due share of all Discos.
The prime minister was informed about the situation recently, who has convened a meeting on consumer power tariff issues this weekend to take a final decision.
On the basis of the revised analysis and transfer of subsidies in the balance sheets of Discos, it emerged that six out of eight distribution companies were in fact running in profit. Two companies — Peshawar and Quetta –- were in real losses. These two would now be injected a sum of about Rs20 million as federal government’s equity that would convert their losses into profit.
A senior finance ministry official said the water and power ministry “has now asked Nepra to take into account the new situation” arising out of “re-analysis of balance sheets” before finalizing its tariff determinations.
A separate summary has also been referred to the Economic Coordination Committee (ECC) of the cabinet to approve the re-assessed balance sheets of distribution companies that would enable all Discos to raise loans from the banking sector for their cash and development needs on their own, on the basis of their improved financial health.
The finance ministry sources said the summary moved by the water and power ministry did not propose any penalty and strict action against Wapda but had placed all the facts on record. “It is now up to the prime minister and the ECC to take any decision,” the sources said.
