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ISLAMABAD: Power Division has sought a Rs 87 billion supplementary grant for Wapda on account of Net Hydel Profit (NHP) payment to KPK and Punjab, sources in Central Power Purchasing Authority-Guaranteed (CPPA-G) told Business Recorder.

Sources said that while determining tariff, Nepra allows NHP as a component which is included in Wapda's power sale billing.

During the current year, CPPA-G released an amount of Rs.46 billion to WAPDA on account of total billing, whereas Wapda has paid Rs 12 billion on account of NHP payment to the Government of Khyber Pakhtunkhwa and Rs 1.5 billion to Government of Punjab.

As of February 28, 2021, Wapda owed an amount of Rs 41 billion to Government of Khyber Pakhtunkhwa as NHP arrears and Rs. 53.19 billion to Government of Punjab. During a meeting chaired by the Speaker of National Assembly on March 22, 2021 and attended by all the stakeholders it was decided that the NHP arrears of GoKPK would be paid by the Government of Pakistan.

Previously, on the directions of the federal government, Wapda took a loan of Rs 105 billion to pay NHP (arrears and regular) to Government of KPK and Punjab in advance. This resulted in an additional financing cost of Rs 11.50 billion which has not been allowed by Nepra to be passed on to electricity consumers. If Wapda again takes a commercial loan for the above unpaid balance, this would further add to the consumer tariff because of its ensuing interest cost. The federal government would have to provide subsidy to service the loan if it is not recovered through tariff, making this a costlier preposition. Moreover, Wapda has also shown its reluctance to take any further loans to pay off NHP arrears, as this would undermine its ability to get commercial financing for its mega hydel projects.

During the meeting, it was also decided that CPPA-G would continue to release approx. Rs 3.0 billion per month to WAPDA from March-June 2021 on account of NHP payments to Government of KPK.

The outstanding NHP arrears as of March 31, 2021 were Rs 91.67 billion of which the share of KPK was Rs 38.44 billion whereas Punjab's share was of Rs 53.23 billion. However, CPPA-G has anticipated Rs 14 billion less receipts from March to June 2021, of which Rs 12 billion is to be paid to KPK and Rs 2 billion to Punjab. Another amount of Rs 9.17 billion of anticipated billing of NHP will be added to Rs 91.67 billion.

The sources said projected unpaid NHP balance as of June 30, 2021 has been calculated at Rs 86.84 billion of which the share of KPK government is Rs 33.11 billion while the share of Punjab is Rs 53.73 billion.

According to sources, Power Division has sought Supplementary Grant of the balance amount of Rs 86.84 billion from CPPA-G for payment to Wapda on account of NHP payment to both provincial governments. This supplementary grant shall be adjusted against current year’s unbudgeted subsidies of Power Division.

Copyright Business Recorder, 2021


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