ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) approved on Friday around 217 per cent increase in the Net Hydel Profit (NHP) of Khyber Pakhtunkhwa and increased the sale price of relatively cheap hydropower by around 16pc.

As a result of the decisions, the KP government will get around Rs19 billion NHP a year, against Rs6 billion at present. The approval came at the request of Water and Power Development Authority (Wapda) after an agreement reached between the Ministry of Water and Power and the provincial government early this year.

“Based on the discussion and while taking a projected generation of 17,004 gWh on account of hydel power stations situated in KP, NHP @ Rs1.10/kWh for FY 2016 works out to be Rs18.704 billion against Rs6 billion previously allowed,” said the regulator.

Also read: KP to seek better hydel profit at Nepra public hearing

The amount was, therefore, included in the revenue requirement of Wapda as payment obligation to the KP as NHP as an interim arrangement, Nepra said in a detailed determination released two months after the public hearing.

In doing so, Nepra increased Wapda’s fixed charges by 16pc for one year and then 34pc for subsequent years. The fixed charge was increased from Rs633 per kilowatt per month to Rs732 per month (16pc) for the entire installed capacity of 6,900MW in the first year and then to Rs849 per kilowatt per month (34pc).

The variable charge was also increased from around 8.69 paisa per unit (kwh) to 10.1 paisa for the first year and then to 11.66 paisa.

Nepra also directed Wapda to immediately take up the agreement reached between the Ministry of Water and Power and the KP government for increase in NHP to the province for approval by the Council of Common Interest (CCI).

The regulator, however, did not approve about Rs9.5 billion NHP payment to Punjab and Rs6.5 billion to Azad Kashmir on power stations in their areas and asked Wapda and the governments of Punjab and AJK to seek their approval from the CCI as required under Article 161(2) of the Constitution.

It observed that in furtherance of Article 161(2) of the Constitution, the CCI approved the Kazi formula for determination of NHP for revenues accruing from generation of power from a hydro-electric station. This was followed by promulgation of the Presidential Order No 3, wherein Wapda was made responsible for payment of NHP to NWFP (KP) and the federal government was designated as guarantor.

Unfortunately, the decision of CCI pertaining to NHP was never implemented. However, in August 1992, on the direction of the then federal finance minister, and under an interim arrangement, a minimum payment of Rs6 billion annually started being paid to the NWFP (KP).

In the instant Wapda Hydel tariff petition, the authority has once again allowed the NHP payment to KP as an interim arrangement, at an enhanced rate of Rs1.10 per unit but expressed its concern that such interim arrangements could not be allowed to continue in perpetuity. “It has been more than 11 years that the authority is allowing an interim payment to the petitioner on account of petitioner’s obligation of payment of NHP to KP. There is, therefore, need for arriving at a permanent arrangement,” it said.

The regulator said that notwithstanding the clear provisions of Nepra Act, the concurrent jurisdiction of CCI and Nepra over the subject of NHP and keeping in view the past history, conflicting claims, different interpretations and acrimony surrounding this subject and the fact that it is a serious matter of a political nature affecting relations between a province and the federation which should be resolved by the CCI by issuing policy guidelines to Nepra to determine NHP.

Published in Dawn, November 14th, 2015