ISLAMABAD, March 5: Water and Power Development Authority (Wapda) has asked the government to reduce the size of tax on furnace oil and electricity to mitigate additional burden on consumers arising out of abnormal increase in international oil prices.
This is part of a multi-pronged strategy Wapda has taken up with the government to avoid an expected increase in electricity prices later this month.
Talking to reporters here on Wednesday, Wapda chairman Zulfikar Ali Khan said Wapda had informed National Electric Power Regulatory Authority (Nepra) that increase in furnace oil by 50 per cent during the last three months had an additional impact of Rs17.5 billion on its revenue.
He said furnace oil prices had increased to Rs16,000 per ton, and its financial impact on the utility had been calculated at Rs17.5 billion. It is now the job of Nepra to see how this could be mitigated.
One way, he said, was to reduce taxes and duties which at the rate of 5 per cent had increased from Rs250 to Rs800.
“The Central Board of Revenue and the Ministry of Finance were getting rich out of this additional income and we have asked them to share the burden,” said the Wapda chief.
He also demanded of the government to restore the powers of Oil and Gas Regulatory Authority (Ogra) to regulate the furnace oil prices. “It is strange that oil prices are being fixed by the oil marketing companies (OMCs) like Shell, PSO and Caltex, which is the primary responsibility of Ogra,” he said.
Zulfikar said Wapda had already suggested to the government to increase strategic reserves, but unfortunately there was no progress so far, despite the fact that the utility’s oil reserves were only for 11 days. He said water level in dams was not up to the expectations whereas, gas was not being supplied to the utility as promised. “Resultantly we have to rely on furnace oil,” he added.
To a question, he said the Italian firm, Impreglio, constructing Ghazi Barotha Hydropower Project (GBHP) has developed habit of seeking extra contractual avenues for profit.
Last year, when the company stopped work on the project on the pretext of 9/11 and approached the International Centre for Settlement of Investment Disputes (ICSID), Wapda bore the losses, however, the issue was resolved after a supplementary agreement, which was implemented by the utility in good faith.
“We paid $45 million as account and advance payment, accepted the old Dispute Resolution Board (DRB) despite the fact that according to agreement new board had to be constituted.
Zulfikar said that GBHP would be completed in time and testing of first unit would start in May as work on the barrage, power channel and powerhouse was on schedule.
He said the concerns of World Bank had almost been resolved. The Ministry of Water and Power has convened a meeting of all the stakeholders on March 10 for better coordination.
Replying to a question, he said that Wapda had dismissed 3,300 employees and took disciplinary action against 40,000.
Asked whether Wapda was revising its Financial Improvement Plan (FIP), he replied that Wapda had completed its portion, but the Ministry of Finance failed to arrange Rs11.5 billion as committed to cover previous year’s unpaid public sector dues.
Zulfikar accepted that Wapda was facing shortfall of reducing line losses to the tune of 1.7 per cent, which meant Rs1.9 billion or Rs2 billion in a portfolio of Rs200 billion revenue, but said would covered in the remaining months of this year.