ISLAMABAD, May 4: The government has decided not to increase the electricity tariff under donor agencies’ pressure and will hold talks with the World Bank and the International Monetary Fund on this issue and to finalize a new financial improvement plan for Wapda’s turnaround.

Official sources told Dawn on Sunday that the Wapda affairs were the only issue where the government had not been able to meet the donors’ conditionalities and that issue could be settled through negotiations.

The IMF and the World Bank said early this week that the last tranche of $109 million from the $1.3 billion IMF programme and the $350 million structural adjustment credit (SAC-III) of the World Bank could not move forward due to slippages on the power sector reforms.

The sources said a revised financial improvement plan for Wapda would be finalized in consultation with the World Bank in the next few days in which new targets would also be set for reduction in line losses and cash flows for the utility.

A senior government official said the donors would have to realize that increase in electricity tariff would not contribute to the real objective of poverty alleviation as envisaged under the donor-assisted programmes and would rather prove to be counter-productive.

A World Bank mission is arriving here today (Monday) to discuss Wapda’s revised financial improvement plan with the government and the Wapda authorities.

Nepra had, on March 30, allowed eight distribution companies of Wapda to increase tariff by an average 12 paisa per unit to provide around Rs1.5 billion relief to Wapda but its notification was later withheld on the directives of the prime minister.

The official said the real problem for Wapda was non-recovery of Rs24 billion from the Federally Administered Tribal Areas (Fata). He said new avenues were being looked into to tackle the issue of receivables.

He said that NWFP Governor Iftikhar Hussain Shah had a meeting with Finance Minister Shaukat Aziz recently to discuss Fata’s arrears problems.

The official did not agree with a proposal that Rs24 billion Fata arrears could be written off in view of Fata’s inability to pay huge bills as the total budget for the area was around Rs7 billion.

“These things (proposals) are very fluid at present and would become concrete only after discussions with the World Bank mission,” said the official. One of such proposals is to refinance Wapda’s loans towards the federal government, another official said.

The donors have specific objections to the non-implementation of fuel-based tariff adjustment under which Nepra had determined an average 12 paisa per unit increase.