ISLAMABAD: Water and Power Development Authority (Wapda) has opposed swapping of the Neelum Jhelum Surcharge (NJS) of Paisa 10 per unit for development of Diamer Basha Dam (DBD), sources close to Chairman Wapda told Business Recorder.
The Neelum Jhelum Hydropower Project is a stand-alone project, which was developed by establishing a Special Purpose Vehicle (SPV) Company, with a separate legal and corporate status, BoD, generation licence, tariff, Power Purchase Agreement (PPA) and financial control, etc. In contrast, Diamer Basha Dam is being developed under the generation licence of Wapda Hydroelectric. The tariff methodology of NJHPC is regulated on the analogy of Independent Power Producers (IPPs) which is entirely different from the methodology adopted by Nepra for hydropower stations included in the generation licence of Wapda hydroelectric.
The Neelum Jhelum surcharge was levied in 2007-08 @ Paisa 10 per unit from electricity consumers to cater to the financial needs of the project and generated approximately Rs 6 billion per annum. This amount formed part of Federal Government Equity which was collected by the Discos and directly remitted to NJHPC for the development of the project and had no impact on Wapda hydroelectric tariff and revenue stream.
According to sources, the capital structure of Diamer-Bhasha Dam (DBD) is different from that of Neelum Jhelum Hydropower Project. The base cost of DBD is Rs 1.283 trillion. To finance this, the federal government would provide Rs 398 billion as Public Sector Development Programme (PSDP) grant which would have no bearing on the tariff of Wapda hydroelectric. Wapda would inject into the project Rs 199 billion as equity and Rs 686 billion would be raised through commercial financing. Any change in the capital structure would require revision of PC-1 and delinking of DBD from Wapda hydroelectric generation licence. It would also mean that all project loans will have to be transferred to DBD company. Without the backing of Wapda's balance sheet, it would be very challenging to obtain commercial financing for the DBD company thereby jeopardizing the financial close of the project.
In case of swapping the NJ surcharge @ Paisa 10 per unit, there would be the following two potential outcomes which will result in financial loss for Wapda and therefore Wapda does not support the swapping of NJS to DBD;(i) the federal government is likely to deduct an equivalent amount collected through DBD surcharge from the approved PSDP grant and ;(ii) since DBD surcharge will be recovered from electricity consumers, Nepra will also disallow an equivalent amount in the tariff allowed to Wapda hydroelectric.
NJHPC has received Rs 62.670 billion upto December 2018 against Discos’ collection of Rs 67.167 billion. Neelum Jhelum surcharge collected and remitted beyond July 4, 2018 to JNHPC can be adjusted by Central Power Purchasing Agency-Guarantee (CPPA-G).
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