- Value of $500 mn collected through bond depreciates to $312 mn
ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) Thursday said that the value of Wapda’s $500 million, raised through a Eurobond and deposited into the National Bank of Pakistan, has reduced to $312 million due to rupee's depreciation versus the US dollar.
These comments were offered by Nepra Chairman Tauseef H Farooqi during a public hearing on Wapda’s petition for upward revision of its hydroelectric power tariff by Rs0.47 per unit to Rs4.15 per unit for 2022-23 from Nepra-determined tariff of Rs3.68 per unit.
Acting Chairman Wapda informed Nepra that Wapda received requests of $3 billion but it raised $ 500 million based on the initial requirement, adding that Wapda has planned to have a sequence of issuances as a note.
Chairman Nepra congratulated Chairman Wapda for raising $500 million through issuance of Eurobond. However, Wapda gave $500 million to the GoP and converted them in rupees at Rs 178/$ and now whenever Wapda would need this amount, it has to buy dollars up to Rs 260/$.
“As per the regulator’s record, Wapda has $500 million raised through Euro bonds. We make it clear that Nepra would not allow any differential to Wapda,” Chairman Nepra said, adding that Wapda should devise a mechanism that the government should give dollars against dollars.
Acting Chairman Wapda said that the entity took up this issue with the GoP and State Bank of Pakistan requesting to maintain the raised amount of $500 million in dollars but due to regulations it could not happen. He said that Wapda would again raise the issue with the GoP and the SBP that it should be allowed to buy dollars at the same rate at which it was converted in dollars for essential payments.
He said, in case, the government does not accommodate Wapda’s request, the differential would have to be borne by the consumers. However, Chairman Nepra made it clear that the regulator would not allow Wapda to pass on the impact of differential of conversion rate to the consumers.
“We are making it clear that Wapda should focus on appropriate forum as door to Nepra is closed,” Chairman Nepra said adding that the regulator is ready to extend all possible assistance to WAPDA in this regard.
Wapda, in its tariff petition sought approval of revenue requirement of Rs212.808 billion for FY 2022-23 from Rs 110.092 billion in FY 2021-22.
In addition to this, Wapda had sought approval of total regular hydel levies of Rs 34.645 billion in FY 2022-23 against Rs 35.942 billion in FY 2021-22. Wapda’s estimated power generation would be 31,352 GWh in 2022-23 as compared to 30,104 GWh in 2021-22.
Chairman Nepra appreciated Wapda for establishment of hydel power plants which are generating cheap electricity saying “only God knows, if this electricity was not there, what would be the price of electricity,” he added.
Nepra raised questions on the performance of some of hydropower generation plants saying that the tariff of some projects was exorbitant.
Wapda officials argued that the Organization should have built a dam every decade but it could not happen due to which the energy sector is facing the issue of circular debt.
The Authority was informed that amendment is ready in Article-1V in the agreement meant to convert PPAs of poor-performing hydropower projects into take and pay mechanism. The tariff of Golan Gol hydropower project is Rs 142 per unit.
According to the proposed amendment which is called “Secured Outages” whenever a hydel plant will be out from the system above a specified period, it will not get capacity payment.
“If we look into utilised factor of some Wapda projects electricity rates are not cheaper as is being portrayed,” said Rafique Shaikh, Member Nepra (Sindh). The utilization factor of hydel projects has declined over the years, which is a financial loss to consumers. “If we go through plant-wise data, generation from Wapda is not cheap, “said Shaikh. Tarbela-V expansion project will have just 12 percent utilization.
“What will be the tariff for 12% utilization of Tarbela-V expansion project,” questioned the Authority.
The issue of notification of Use of Water charges, CCI decision and other relevant issues during the year also came under discussion. The regulator maintained that it is not possible for it to allow increase in hydel tariff for consumers to meet revenue requirements of Wapda when generation of units is on the decline. The regulator grilled Wapda team for seeking Rs1.3 trillion on account of employees’ expenditure and Rs1.5 trillion for repair and maintenance.
During the hearing, Chairman Nepra said that closure of Neelum Jhelum is causing a loss of Rs10 billion per month which implies that closure of the plant for six months will cause a financial loss of Rs60 billion.
Copyright Business Recorder, 2022