Where is Karachi's share of hydel power?

The National Electric Power Regulatory Authority (Nepra) has allowed Wapda to increase hydroelectric tariff by 36.65 paisa per unit for the year 2007-08, from the current rate of 260.22 paisa that includes 231.59 paisa fixed charges and 28.63 paisa variable charges, says a Recorder Report.
Wapda had proposed 320.27 paisa per unit (35.22 paisa variable charges and 285.05 paisa fixed charges) but the regulator has allowed 296.83 paisa per unit (30.97 variable charges and 265.96 paisa fixed charges). The revised tariff is based on net electric output of 28,550 GWh and installed capacity of 6,444 megawatts. Nepra has allowed Wapda to increase tariff despite opposition by APTMA, FPCCI and KCCI. Wapda's petition for tariff revision was based on two grounds, ie the current tariff was designed for 2005-06 without any provision of indexation, and secondly, the revision in salaries had resulted in higher O&M costs.
Wapda also argued that its assets base had undergone a significant increase since the last tariff determination, and sought adjustment in capacity charges due to the decommissioning of Jabban hydel station. The utility contended that its fixed assets base was expected to reach Rs 162 billion by the year 2007-08 due to higher infrastructure investment, as compared to the previous investment base of Rs 120 billion.
So it has requested for a tariff indexation mechanism to meet its changing needs, instead of having to file a new petition each year. However, the regulator has turned down the proposal, maintaining that there was no justification for providing an indexation mechanism. The regulator has assessed O&M cost at Rs 3.119 billion, NHP/WUC at Rs 6.720 billion, depreciation at Rs 5.309 billion, dividend/other income at Rs 2.191 billion and the rate of assets at Rs 16.424 billion. Thus, Wapda's total hydroelectric revenue requirement has been estimated at Rs 29.381 billion for the year 2007.
Pakistan has two well-integrated public sector power utilities: Wapda and KESC, while its aggregate installed power generation capacity is 19,522 megawatts, with IPPs contributing 5,977 megawatts, and PAEC contributing another 462 megawatts. Further, based on its present generation capacity, the country's hydel-thermal mix has been calculated at 34:66, which is almost the reverse of an ideal hydel-thermal mix of 70:30, for the overall economic development of the country.
In the presence of this lop-sidedness, the country's power shortages are being largely met through thermal power rather than the much cheaper hydel alternative, the potential of which has been calculated at over 40,000 megawatts. However, the policy of reliance on the thermal option to weather the crisis has caused a drastic increase in power tariff. Pakistan's current account deficit is said to be due to the impact of increase in oil prices in the international market.
And the price spiral has generated serious difficulties for Pakistan, as its oil import bill has shot up to $5-6 billion while its trade deficit has reportedly crossed $12 billion mark. While Wapda is utilising all the power generation resources, ie hydel, thermal, nuclear, etc. KESC has to depend entirely on the thermal option, with Kanupp's share being at best only marginal. Interestingly, while the hydel power's share for the rest of the country is 30 percent, KESC's total reliance on the thermal option has eroded the competitiveness of goods produced in the industrial hub, which is home to 65 percent of the country's industry and 80 percent of its finance.
According to the latest projections, Karachi will need an additional 1,300 megawatts of electricity in 2007 in order to play its role in achieving the high GDP growth targets set by the government. While Nepra has allowed Wapda to increase hydroelectric tariff by 36.65 paisa per unit, Karachi has had to rely exclusively on the prohibitively expensive thermal option, and remained deprived of its due share in the cheaper hydel power, which is clearly an injustice to Karachi-based industry. Another factor that entitles Karachi to a share in hydel power is its huge contribution in the national tax revenue.
There is clearly a need for the Karachi City Government to take up with the higher authorities this injustice to the country's industrial hub, which accounts for a major share in the country's foreign exchange earnings as well. The government should ensure that Pakistan's industrial hub gets its due share in the pie of cheaper hydropower, which will help impart to our exports a competitive edge in international market.