ISLAMABAD, March 21: The International Monetary Fund (IMF) has asked the government not to interfere in the electricity tariffs of Wapda and KESC for political gains and let the pricing system to develop with transparency.
The finance ministry has also agreed to provide the formula and recovery schedule of public sector dues to the IMF and the Wapda by March 30, which now stand at more than Rs33 billion so that realistic targets could be set for next year, senior official in the finance ministry told Dawn.
The Wapda chairman had complained to the IMF team during recent meetings the government had used even the automatic fuel based tariff mechanism for political purposes and did not implement decisions of the National Electric Power Regulatory Authority on quarterly tariff revisions.
Quoting certain specific incidents of delayed recovery of public sector dues and non-transparent implementation of automatic fuel adjustment formula, the Wapda blamed the federal government for disruption of its financial improvement plan (FIP) agreed to with the IMF last year.
The IMF told the government that implementation of the automatic fuel adjustment formula should be based on rules otherwise the fiscal gap of the utility would continue to grow in the months to come.
The IMF also advised the Wapda to reduce energy losses of Hyderabad and Peshawar Electric Supply companies (Hesco & Pesco) as Wapda insisted that only these two distribution companies were in the negative and overall losses of other companies have now been reduced to a comfortable level and were well on target.
The Wapda had told the IMF that the government delayed the implementation of 19-30 paisa per unit increase announced by Nepra in August/September was delayed for over a month and then a reduction in rates in second quarter review was implemented on December 16.
The Wapda said that again the raise in fuel based tariff was due on March 16 but was still to be determined by the Nepra. The finance ministry has already asked the provincial governments and the public sector institutions to clear their dues by March 31 or should be ready for at source deductions at once.
Wapda’s public sector arrears have touched Rs33 billion mark this year against Rs20 billion of last year, up by Rs5 billion in a year.
Wapda’s revenue shortfall was estimated at Rs28 billion by the year 2003 which was to be met through various measures under the financial improvement plan that could not be adhered to and the revenue shortfall rose to Rs35 billion.
The Wapda and finance ministry are currently revising Wapda’s FIP that has to be shared with the IMF and the Bank by next month to meet conditionalities of the $350 million structural adjustment credit.
The non-compliance with the FIP has been attributed to continued increase in fuel prices, failure to collect electricity arrears to the agreed limit and reduction in line losses to 15 per cent and inadequate increase in tariff since start of the fiscal year.
The finance ministry sources, however, suggest that there was no provision for budgetary support to the utility in the budget 2002-03 on the understanding the Wapda would be self- reliant through measures under the FIP.
They admit that some of the factors in the non-compliance with FIP were out of Wapda’s control, any recourse to budgetary support would result in increased fiscal deficit.
Wapda is already accusing the ministry of collecting massive revenue due to increase in fuel prices and withholding sales tax refund to the utility to show higher revenue collection to the donors.
These sources said that the IMF and the Bank were opposed to the budgetary support and wanted the Wapda to increase tariff, curtail line losses and administrative cost and recover Rs33 billion receivables from the public sector.
