ISLAMABAD, Dec 17: The federal government has decided to provide Rs15 billion worth of foreign loans to Wapda's storage and hydel power projects at 12 per cent interest rate, it is learnt.
Sources in the Ministry of Finance told Dawn on Friday that Abu Dhabi Fund for Development (ADFD) had extended about Rs15 billion loans for Gomal Zam Dam, Allai Khawr Hydro Power Project, Khan Khawr Hydro Power Project and Duber Khawr Hydro Power Project.
These sources said the government has been re-lending foreign loans to the Wapda at a standard rate of 17 per cent and the total size of federal re-lent loans to the Wapda have increased to more than Rs220 billion.
The Wapda authorities have been agitating at almost all forums that there was no justification for re-lending to Wapda at 17 or 18 per cent interest rate when the lender agencies were extending to the Wapda through the federal government at nominal charges of 1-4 per cent.
These sources said that because of higher re-lending rates, the Wapda has been unable to return its interest payments and principal loans for the last many years and finally the government has to convert these loans into equity.
"There is no point in fixing such a high interest rate when these could not be realised and that too at a time when a lot of local financing is available to Wapda from the commercial banks at very competitive rates," a Wapda official said.
He said as a first step, it has been decided that new loans to Wapda would be much lower than existing standard re-lending rates of 17 per cent or so. The official said the Economic Coordination Committee (ECC) of the cabinet, which met last week decided that these four projects carrying Rs15 billion funds from the Abu Dhabi Fund for Development be re-lent to Wapda at 12 per cent interest instead of 17 per cent standard re-lending rate.
The four projects namely Gomal Zam dam, Allai Khawr, Khan Khawr and Duber Khawr carry a total estimated cost of Rs36.5 billion. Physical progress on Gomal Zam is about 11 per cent. The physical progress on other three hydropower projects is between six to eight per cent at present.
The sources said the government has also decided to start the re-costing exercise to assess the real cost of Wapda loans worth over Rs220 billion so that interest rates on these projects could be reduced commensurate with prevailing market conditions.
The saving so achieved, which is estimated to be over Rs40 billion, could be put at the disposable of Wapda to improve its financial position or to finance development schemes.