KARACHI, Sept 1: The state-run Water and Power Development Authority (Wapda) suffered a financing gap of Rs1 billion during the last fiscal year, according to the data released by the Ministry of Finance.
A year earlier, Wapda had reported an income surplus of Rs17.5 billion.
What deteriorated the financial condition of the giant utility was an increased cost of fuel due to higher international oil prices. The cost of fuel shot up from Rs40 billion in FY04 to more than Rs52 billion in FY05, the data posted on the ministry’s website indicate.
During July-June 2004-05, Wapda also had to spend more for purchasing power from the independent power producers (IPPs) -— Rs109.7 billion against Rs94.9 billion in FY04.
Wapda, however, almost halved its cost of debt servicing from Rs16.1 billion in FY04 to Rs8.2 billion in FY05 but that did not include the servicing of the government’s debt.
In fact, all its debt servicing liability towards the government (worth Rs21.6 billion) was converted into the government’s equity in Wapda.
During the last fiscal year, the state-run power utility also saw a significant increase in its operations and maintenance cost, which shot up to Rs26.9bn from Rs21.5bn a year ago. Other items of cash outflows, not identified individually, also ate up Rs6.5bn in FY05 against Rs3.4bn in FY04. Actually Wapda reported total cash outflows of Rs209.6bn in the outgoing fiscal year against its total cash inflows of Rs221.3bn. That left it with a rather surplus of Rs11.7bn but as it also consumed Rs12.7bn set aside as self-financing of its investment programme, it ended up with an actual financing gap of Rs1bn.
Operational results of the giant power utility show that during the last fiscal year it generated 73,515 GWH up from 69,091 GWH a year earlier. It also purchased 25,637 GWH power from IPPs in FY05, up from 20,668 GWH a year ago.
That partly explains why Wapda had to spend Rs109.7 billion on power purchase from IPPs in FY05 whereas it had spent only Rs94.9 billion on this account in FY04. This increase in the bill can also be attributed to a higher purchase value.
The state-run utility suffered a huge 24.7 per cent line losses in the outgoing fiscal year marginally lower than that of 25.5 per cent in FY04 but still far higher than the internationally acceptable standards.
KESC: The state-run Karachi Electric Supply Corporation (KESC) also suffered a net shortfall of Rs6.852bn in its income and expenses in the last fiscal year. According to the data released by the Ministry of Finance, the total receipts of the power utility stood at Rs47bn whereas its expenses exceeded Rs55bn thus making it suffer a loss of Rs8.1bn. However, what reduced this loss to Rs6.8bn was a budgetary funding of Rs1.3bn by the government.
The cash flow statement shows that the KESC also took the hit of increased cost of fuel due to higher international oil prices. Its fuel bill totalled Rs26.8bn in FY05 against the target of Rs24.2bn. This, coupled with such other factors as the management’s inability to increase revenues, curtailed KESC’s development expenses to Rs3.3bn from the targeted level of Rs8.3bn.