LAHORE, June 8: The Water and Power Development Authority (Wapda) could immediately turn into a profit-making organization if the government cleared its dues to the tune of Rs38.24 billion.

A spokesman for the authority on Sunday resolutely defended Wapda’s position against the government claims that “it was surviving on repeated doses of heavy subsidies, and costing dearly to the national exchequer”.

“The federal government has developed a habit of clearing its dues partially as ‘subsidies’,” he said. Wapda neither needs nor has it ever asked for a subsidy, he added.

“On the contrary, Wapda’s economically precarious position is the government’s doing, which is holding on to its dues.” The authority has to pay only Rs15.2 billion to different organizations: Rs8.6 billion to independent power producers, Rs4.1 billion to gas companies, Rs500 million to oil companies and Rs2 billion in net hydel profit.

At present, there is a public sector default to the tune of Rs38.24 billion. The Federally Administered Tribal Areas (FATA) alone owe Rs25.402 billion, the federal government departments Rs1.4 billion, agriculture tubewells Rs1.689 billion, the provincial governments and agencies Rs3.94 billion, the AJK Rs1.11 billion while the KESC owes Rs4.4 billion.

If the federal government clears these dues, the authority would be left with a profit of Rs23 billion.

The federal government accepted the responsibility for clearing these dues through deductions at source if the individual departments failed to do so. In June 2000, at a meeting with the president participated in by all those who mattered, a mechanism was evolved for clearing these dues.

The meeting decided that any department having objections to any bill would have to approach the authority within 15 days, and the process would not take more than two months. However, if any department or agency fails to clear its dues within 90 days, there would be deduction at source (the government withholding budgetary payment and advancing the same to Wapda).

However, the federal government failed to do this, and the public sector default stood at Rs38.24 billion as a result. The authority can be blamed neither for this default nor the government’s failure to perform a duty that it agreed to discharge. During the current fiscal year alone, the public sector default had gone up by Rs13.55 billion, he said.

This was happening despite the fact that the authority had absorbed a Rs93 billion shock for increased oil payments alone during the last five years. If taken at the base price of furnace oil, which was Rs5,500 a ton, the authority had paid over Rs93 billion to the IPPs on this account. Had this been allowed to affect the per unit price, it would have increased the cost by 60 paisas.

The authority was able to save another 38 paisas per unit by signing new MoUs with the Independent Power Producers. Both these factors could have increased the price per unit by 98 paisas. Out of these 98 paisas, only 20 paisas were recovered through tariff hikes. Instead of crediting the authority with this effort, some government functionaries were trying to belittle the authority with false claims, he maintained.