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ISLAMABAD: Ahead of a crucial meeting of the Council of Common Interests next week, the centre and Khyber Pakhtunkhwa have reached an agreement on settlement of net hydropower profit, gas allocations, power generation and development of an irrigation project.
Finance Minister Ishaq Dar and Khyber Pakhtunkhwa Chief Minister Pervez Khattak signed a memorandum of understanding here on Thursday.
Under the agreement, the federal government will pay Rs70 billion net hydropower profit to the province in four years, pick up major cost of Chashma Right Bank Uplift Canal project and empower the provincial government to set up a 500MW power project based on locally produced natural gas.
The two sides decided that the uncapped Net Hydropower Profit (NHP) as determined by the National Electric Power Regulatory Authority (Nepra) at the request of the KP government and the Ministry of Water and Power would be notified immediately.
“Accordingly a total amount of Rs70bn was agreed on account of arrears of uncapped NHP after reconciliation of mutual claims in the power sector between the two governments as full and final settlement,” an official statement said.
They decided that after seeking concurrence of CCI through the water and power ministry, the Water and Power Development Authority would file a tariff petition for recovery of arrears from power consumers across the country.
The recovery from consumers and payments to KP would be made in four instalments. The first instalment of Rs25bn would be paid to the province during the current financial year and remaining amount in equal instalments of Rs15bn each in three years.
Nepra had approved an increase of around 217 per cent in NHP for KP in November last year while raising the sale price of hydropower by about 16pc. The KP government would now be entitled to around Rs19bn NHP annually against the current Rs6bn.
“Based on the discussion and while taking a projected generation of 17,004 gWh on account of hydel power stations situated in KP, NHP at Rs1.10/kWh for FY 2016 works out to be Rs18.704bn against Rs6bn previously allowed,” the regulator noted.
In doing so, Wapda’s fixed charges were also increased by 16pc for one year and 34pc for subsequent years. The fixed charge was increased from Rs633 per kilowatt per month to Rs732 (16pc) for entire installed capacity of 6,900MW for 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 per unit.
The MoU also settled the matter regarding allocation of gas for power generation that the province has been agitating at all forums, including official and public meetings. Under the MoU, the federal government would allocate 100 MMCFD (million cubic feet per day) gas to the KP government for use in power generation either on its own or through partnership with the private sector.
This was done following inability of the Private Power and Infrastructure Board to set up a plant for which it was authorised by the federal and KP governments more than a year ago.
The two sides also discussed matters regarding Pehur Hydropower Project owned by the KP government. “It was agreed that a power purchase agreement would be signed by the Central Power Purchase Agency-Guarantee latest by March 31, which would incorporate a mechanism for recovery of outstanding amounts.”
They resolved the issue of Chashma Right Bank Uplift Canal project and its cost escalation from Rs60bn. It was agreed that the feasibility of the project would be carried out afresh by the water and power ministry and the KP government in coordination with the Planning and Development Division. Upon approval, the project would be co-financed by the federal and KP governments with a 65-35 ratio. The KP government would also bear the operation, maintenance and recurring costs of the project.
The two sides agreed that the issues of Workers Welfare Fund relating to KP would be duly addressed by the secretary of the federal human resource development ministry on a priority basis.
Published in Dawn, February 26th, 2016
