The Water and Power Development Authority (Wapda) has sought more than 80 per cent increase in tariff to pay around Rs88 billion hydropower profit to Punjab and Khyber Pakhtunkhwa during the next fiscal year.

Wapda has a generation capacity of about 7,000-megawatt or almost one-third of the country’s total power generation.

In its tariff petition to the National Electric Power Regulatory Authority (Nepra), Wapda has demanded an increase in its overall tariff from Rs4.05 per unit (kwh) to Rs7.30 per unit for 2017-18, an increase of 80.25pc.

The major increase in tariff has been necessitated because of the federal government’s agreements with the provinces for guaranteed payment of net hydropower profit. Wapda has claimed Rs121bn dues payable in 2017-18 to the two provincial governments on account of cost plus hydel levies margin, commonly known as net hydel profit (NHP).

This cost head has more than doubled from current year’s Rs59.8bn. As a result, Wapda has requested about 92pc increase in hydropower levies to Rs3.61 per unit for 2017-18 instead of Rs1.88 per unit being charged to consumers during the current fiscal year.

On the other side, Wapda has estimated the average cost of its power generation to go up by 70pc to Rs3.69 per unit (kWh) from Rs2.17 per unit at present. The total revenue requirement for 2017-18 has been estimated at Rs124bn against the current year’s approved revenue requirement of about Rs69bn.

Wapda has estimated the NHP payments to KP at Rs46.5bn including Rs20.786bn as regular annual payments, Rs15bn to clear the arrears and Rs10.5bn in interest.

In addition, Wapda would be paying about Rs73bn to Punjab on account of regular NHP of Rs9.5bn and about Rs62.6bn in two installments of the arrears for two financial years.

In November last year, the federal government had directed Wapda to pay the Punjab government Rs82bn as NHP for power generated by the 1,450MW Ghazi-Barotha hydropower project (GBHP) since 2005.

Of this Rs38bn has been settled upfront and the remaining Rs44bn in the next three fiscal years at a rate of about Rs14.5bn per year. Wapda will continue to pay Rs9.5bn to Punjab every year for the productive life of the project.

The directive was issued following an agreement finalised by Finance Minister Ishaq Dar, Punjab Chief Minister Shahbaz Sharif and Water and Power Minister Khawaja Mohammad Asif following the principles of a similar settlement reached early last year with the KP government in the matter of Tarbela dam.The agreement entailed Punjab to get Rs1.10 on each unit of electricity produced by the GBHP — the same rate paid to KP for Tarbela. However, payment to Punjab is higher as it is being given full arrears for the last 11 years. KP had received partial NHP for more than two decades at a capped rate of Rs6bn instead of Rs19 billion per year, announced by the Council of Common Interests (CCI) in 2015.

As a result in November 2015, Nepra approved around 217pc increase in the NHP of Khyber Pakhtunkhwa and increased the sale price of relatively cheap hydropower by around 16pc, resulting in Rs19bn annual payments.

Published in Dawn, April 12th, 2017

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