THE Malakand-III hydropower project, having a generating capacity of 81MW electricity, is expected to go into commercial production by the end of this year. But differences have cropped up between the government and the industry as to how the electricity should be distributed.

While the government wants to sell the electricity to Wapda, the industrialists want the province to have its own transmission and distribution company.

The hydropower project (M-III) is the first ever self-financed hydropower station installed by the NWFP government. NWFP possesses immense resources for hydropower generation and out of the 40,000MW potential of the country, 70 per cent is located in the province.

Likewise, the country’s installed capacity of hydropower stations is about 6,595 megawatt, out of which 3,767 megawatt is in the NWFP (more than 50 per cent).

Work on the M-III project was initiated by the previous government with the aim of feeding the local industry with cheaper electricity enabling it to compete with the industries of other provinces.

The government had planned to set up an industrial estate near Daragai (Malakand), a few kilometres downward the main power complex, to create job opportunities and attract investment ..

But, now the government has changed its plan and decided to sell 71MW electricity to Wapda and the remaining 10MW to sick industrial units after a consultant termed the setting up of the industrial estate in hilly areas non-feasible.

About 10MW electricity would be provided to sick industrial units elsewhere in the province through wheeling charges by Peshawar Electric Supply Company’s (Pesco) distribution network.

The provincial authorities at present are in contact with the National Electric Power Regulatory Authority (Nepra) for securing a 'good' per-unit price for the 71MW electricity.

According to officials, Wapda, being the purchaser has offered 3.2 cent per unit price for the project in line with the Federal Hydro Policy 1995, whereas the provincial government wants at least five cent per unit price.

The provincial government has recently hired a legal adviser, who will file a petition with Nepra for getting the maximum per unit price.

The MMA government has been attaching high expectations from the forthcoming project, at least Rs1 billion to Rs1.5 billion additional income through electricity sale.

The NWFP industrialists, however, are unhappy over selling power to Wapda instead of giving it to them on subsidised rates as planned earlier. They believe the decision will dash the hopes of building a sound industrial base in the province and set a bad precedent.

President of the Industrialists Association, Peshawar, Numan Wazir, says: "At the International Investment Conference, organised by the NWFP government some two years back, the Sarhad Chamber of Commerce and Industry (SCCI), and Employees Old Age Benefit Institute (EOBI) signed a Memorandum of Understanding (MOU) for financing remaining construction work on M-III. This is sufficient to gauge how much the local business community is interested in the project."

The industrialists, he says, on various forums have advocated transmission of such electricity to local industrial units through wheeling charges by using the Wapda transmission lines because this is the only way to tackle unemployment and poverty.

He explains: "The M-III would generate electricity at the rate of Rs1.92 per unit as compared to Wapda's Rs5.50 per unit, and cheaper electricity would ultimately boost the industrialisation and create employment.

Electricity to be generated from such project could be supplied to industries through wheeling charges by using the distribution network of Wapda. The officials of Irrigation Department, however, have a different view. They say a huge provincial set-up will be needed to look after the distribution mechanism and overall financial and administrative affairs of the project.

"Thus, managing a huge public utility organisation will increase the financial liabilities of the provincial government. Whereas, selling out electricity to Wapda will be an easy way to generate revenue without affecting the already incapacitated government institutions," the officials said.

In response to government worries, Mr Wazir clarified that Pesco or any other distribution company is legally bound through the Nepra Act to distribute electricity in the province generated from any of these hydroelectric projects.

He said that the M-III should be converted into a private limited company registered under Companies Ordinance 1984 with the Security and Exchange Commission of Pakistan for its future operations.

The Company should have a board of directors 50 per cent from the government and 50 per cent from the private sector with a chief executive and other staff on contract with market-based salaries.

The province's relations with Wapda, in his views, in the context of prevailing stand off over net hydro-profit issue is not very good, therefore at this stage the M-III deal would deprive the province of a golden opportunity that it could materialise for boosting its industrial growth.

“The M-III is the first-ever attempt to exploit the hydro-power generation potential in province through installation of small stations. The unemployment ratio in NWFP is higher than in all other federating units so we have to encourage labour intensive industrial units for creating new jobs and it cannot be possible unless the government feed the local industry with cheap electricity," Mr Wazir remarks.