The provincial officials said that the Pesco was required to pay the price on the basis of annual net generation of 57.7 GWh since the low power generation had been caused by low irrigation water demand. - File photo

Because of this delay the hydropower unit has not been able to start repayment of loan to the government, officials confirmed to Dawn.

“Certain Pesco officials are reluctant to finalise the power purchase agreement (PPA) because of their fear of the National Accountability Bureau,” a well-placed government official said when contacted.

The 18MW Pehur Hydropower Project was developed in Swabi district downstream Gandaf pressure tunnel that forms an integral part of Pehur High Level Canal drawing water from Tarbela dam.

Substantial part of the government’s contributions to the project was made as a loan.

“Based on Rs722.3 million debt (70 per cent of the project cost of Rs1,301.9 million) determined by the National Electric Power Regulatory Authority the debt servicing component of tariff for 10 years, re-payable in 40 equal quarters and carrying interest of KIBOR+3 per cent, works out to Rs2.46/kWh,” contains a Nepra order of Dec 6, 2010.

The non-finalisation of PPA had delayed the project’s financial benefit to the provincial government, said an official.

The Nepra, under its Dec 6 order fixed the per unit price sold by Pehur project at Rs4.8, which, according to officials, is much less than the per unit price being paid by the Wapda to the Independent Power Producers and rental power plants.

An official said that in the absence of PPA the Pesco had been paying Re1 per unit to the provincial government under a temporary arrangement in line with the national power policy.

“It (Pesco) will pay the remaining amount after signing the PPA,” said a senior power department official.

The tariff determined under the Nepra order is for 25 years, commencing from the date of commercial operations date (COD).

The officials said that Sarhad Hydel Development Organisation, a government organisation developing hydel power units in Khyber Pakhtunkhwa, requested the Pesco in April 2011 to sign the PPA, fulfilling legal requirements in accordance with the power policy.

A Pesco official said the company’s board of directors had recently approved the Rs4.8 per unit price.

“I am not sure what is stopping it (Pesco) from signing the PPA after the board’s approval,” Nauman Wazir, who is on Pesco’s BoD, told Dawn.

Under the Nepra order, Pesco is required to sign the PPA with the government. The project achieved the COD on March 1, 2010 following which it started supplying electricity to Pesco’s 132KV grid station at Gadoon in Swabi district.

The officials said that over 93 million units were sold to the Pesco between March 2010 and Sept 2011.

“The price of 93 million units sold to the Pesco comes to Rs447 million (per unit price at Rs4.8),” said an official, adding “the company has made the payment at a rate of Re1 per unit, leaving it with over Rs350 million arrears, recoverable after the PPA signing.”

As such, the project could not repay the quarterly loan installments to the government, confirmed an official.

“Financial losses due to non-payment of loan repayments would be recovered from the Pesco,” said a government official.

However, another official said the PPA won’t cover those losses.

The officials said that certain quarters in Pesco were hesitant to sign the PPA believing it might expose them to action by the NAB. “They (Pesco officials) argue that Pehur hydropower unit has been generating around 12MW that is less than the generation capacity on the basis of which Nepra had determined the rate at Rs4.80 per unit,” said an official.

He said: “The plant is producing less electricity because of low water demand in areas irrigated by the Pehur canal and since Nepra has fixed the tariff on ‘capacity charge’, the Pesco has no justification to delay the PPA signing.” Under the Nepra order, the Pehur unit has an ‘annual net power’ generation capacity of 57.7GWh, which is higher than what the power plant has been supplying to Pesco since achieving COD.

The provincial officials said that the Pesco was required to pay the price on the basis of annual net generation of 57.7 GWh since the low power generation had been caused by low irrigation water demand.