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Govt proposes power tariff hike to clear Punjab, KP hydel profit dues

Updated November 07, 2017

ISLAMABAD: Amid protests by Khyber Pakhtunkhwa and Punjab over the non-payment of their net hydel profit (NHP), the government has decided to increase electricity tariff by an average Rs1.50 per unit for the consumers of all ex-Wapda distribution companies (Discos) to generate more than Rs115 billion during the current fiscal year.

An official said the increase would generate about Rs65bn required for payment to two provinces on account of NHP, including Rs32bn to KP and more than Rs33bn to Punjab. Another Rs35bn would flow to the Discos on account of write off amounts.

Informed sources told Dawn that the Power Division had moved a summary ‘Tariff Determination and Notification for FY 2015-16’ to the federal cabinet on the directives of the Cabinet Committee on Energy (CCE) led by Prime Minister Shahid Khaqan Abbasi to pass on a major part of tariff adjustment already allowed by the National Electric Power Regulatory Authority (Nepra).

The next meeting of the federal cabinet is expected to formally approve the tariff increase before formally advising the regulator about the size of tariff increase for each consumer category depending on the basis of budgeted subsidy.

Rs1.5 per unit increase will generate Rs115bn

Sources said the provinces have been raising the issue of non-payment of NHP and formally lodged a complaint at a recent meeting of the Inter-Provincial Coordination Committee (IPCC).

Minutes of the meeting seen by Dawn suggest Joint Secretary Power Division Zargham Ishaq Khan and Member Finance Wapda Ikram Khan “expressed their inability to release NHP to KP and Punjab as notification of tariff had not been issued and recoveries from Discos were awaited. However, JS Zargham reported that a summary had already been submitted to the cabinet for approval”.

The source said the secretary of the Inter-Provincial Committee reported to the IPCC that the commitment of Secretary Water Resources for resolution of NHP issue within 2-3 days had not been honoured on part of the federal government because of the said official’s transfer. A report on the subject had also been sent to the prime minister but the matter remained unresolved.

“Chief Minister Khyber Pakhtunkhwa, Secretary Energy Punjab and Special Secretary Finance Punjab insisted upon immediate release of NHP as they had already incorporated in their development budgets for the ongoing financial year,” official records suggest.

The IPCC therefore asked the Ministry of Finance to take the responsibility for the payment of Rs80bn to the provinces of Punjab and Khyber Pakhtunkhwa on account of NHP.

The meeting “decided that the finance division should take the responsibility of payment NHP along with arrears up to the tune of Rs31.839bn (including Rs16.829bn arrears of 2015-16, 2016-17 and Rs15bn for the five months 2017-18) to the province of KP in the spirit of agreement signed between the Federal Government and Government of KP”.

The Central Power Purchase Agency (CPPA) and Wapda shall recover this amount from the monthly recoveries of tariff.

Also, it was decided that the federal government and Wapda would ensure payment of NHP along with arrears up to the tune of Rs33.2bn (Rs14.86bn arrears the payment of which was contingent upon finalisation of tariff by Nepra and Rs18.5bn regular annual NHP for 2016-17 and 2017-18 which was contingent upon tariff determination to the government of Punjab within the current financial year.

With proposed increase, the average tariff for Discos would go up to Rs12.90 per unit.

Published in Dawn, November 7th, 2017