ISLAMABAD: The financial woes of the Water and Power Development Authority (Wapda) have reportedly aggravated due to the reduction of its hydroelectric energy invoices by 50 percent by the Central Power Purchasing Agency-Guaranteed (CPPA-G).
Wapda Acting Chairman Naveed Asghar Chaudhry wrote a letter on July 28, 2022 to Secretary Water Resources and other concerned authorities in continuation of an earlier letter of June 08, 2022 regarding a substantial reduction in releases to Wapda on hydroelectric energy invoices.
According to Wapda, for the past few months, the CPPA-G has been paying well below its bare-minimum monthly requirement of Rs. 7.50 billion. During the last two months of May & June 2022 CPPA-G has released only Rs. 2.50 billion which is half of their already committed monthly energy component of Rs. 5.00 billion.
“This is seriously affecting our capacity to meet essential payments including O&M, debt servicing, pension fund and equity injection needs in important national hydel projects,” he added.
Wapda has claimed that its current outstanding stock of receivables has reached a staggering figure of Rs233.453 billion details of which are as follows: (i) energy receivables Rs66.530 billion; (ii) Net Hydel Profit (NHP) NHP payable to Provinces (GoKP), Rs6.291 billion, GoPb Rs60.668 billion), total Rs66.959 billion; and (iii) loans payable to Federal Government, Rs97.964 billion.
Acting Chairman Wapda also noted that the State Bank of Pakistan (SBP) current policy rate is 15% and the Pakistani rupee has crossed the threshold of Rs236 against the US dollar in the interbank market, factors that have substantially increased the Organisation’s debt servicing cost of both local and foreign loans.
As such, Wapda’s bare minimum monthly requirement is Rs.7.50 billion which is quintessential for meeting its scheduled repayment(s) in respect of direct & indirect foreign borrowings, he continued.
After explaining the background, Acting Chairman Wapda once again requested the concerned authorities of the Federal Government that necessary directions may be conveyed to the CPPA-G for making the agreed monthly payment of Rs7.50 billion to Wapda against on hydroelectric invoice(s) besides immediately clearing overdue hydroelectric receivables of Rs. 233.453 billion at the earliest enabling the Organisation to meet its operational and development needs.
The CPPA-G, which is a market operator of entire power sector, has failed to ensure due payments of power companies both in the public and private sector due to some private power producers issuance of notices of payment under the Power Purchase Agreement (PPA).
The CPPA-G officials privately acknowledge that they are unable to pay energy prices to the power producers due to recovery issues from DISCOs and due to higher tariff recovery of billing is also on the decline.
Copyright Business Recorder, 2022