ISLAMABAD: Power Division has claimed that circular debt stock has crossed Rs 4 trillion after Rs 400 billion were added to it during the current fiscal year. According to a Supreme Court’s Order, this figure was shared by Secretary Power Division, Rashid Mehmood on January 12, 2023 during hearing in Supreme Court.
Power Division; however, has continuously claimed in media that stock of circular debt was less than Rs 2.6 trillion.
Now, Secretary Ministry of Water Resources, Hassan Nasir Jamy in a letter to Secretary Power Division has sought payment of overdue amount of Rs 250 billion for hydropower projects as WAPDA is carrying out major chunk of the development for the purpose, which necessitates integrated framework for construction of dams, hydroelectric plants and power evacuation infrastructure.
He argued that it is imperative that a well-coordinated power evacuation plan is put in place by the National Transmission and Despatch Company (NTDC), in sync with the completion schedules of mega projects like Diamer-Basha Dam (DBDP), Mohmand Dam (MHPD) and Dasu Hydropower projects. Availability of financial resources is equally important to ensure successful completion of the projects without time overruns.
Fund for construction of dams: Amount increased to Rs16.53bn, SC told
According Secretary Water Resources, during the hearing in Supreme Court of Pakistan on January 12, 2023, while taking cognizance of progress on implementation of NTDC’s power-evacuation project for DBDP, the Supreme Court directed the Power Division to look into the matter, as apart from this transmission line, there are other projects of power generation that are required to be connected with the National Grid.
The Apex Court also observed that the progress in construction works of both the projects is lagging behind the planned schedule due to multiple reasons, one of the major ones being the non-availability of adequate financial resources including those from WAPDA’s equity.
The Court was apprised that the equity injunction was contingent upon the payments of WAPDA’s receivables by the CPPA-G. The total due amount has now accumulated to around Rs. 250 billion. During the hearing Secretary Power Division informed the Court that the Power Division was taking necessary steps to pay the requisite amount as per available resources.
Foregoing in view, and given the sensitivity in timely implementation and completion of Diamer-Basha and Mohmand dam projects and their associated power evacuation infrastructure, following has been requested: (i) CPPA-G should be directed/ advised to make due payments to WAPDA; and (ii) NTDC should establish close coordination with WAPDA and furnish a firmed-up timeline to demonstrate completion of power evacuation infrastructure in sync with the completion of mega projects on the Indus cascade. During the hearing, Legal Advisor of WAPDA submitted a progress report in Court, perusal whereof reveals that the progress in construction of Diamer Bhasha and Mohmand Dams is lagging by 12 months.
He stated that COVID-19, as well as, the floods affected the pace of construction work on both dams and added that apart from natural disasters, the availability of inadequate financial resources is another major factor which has effectively hindered progress at the sites.
According to him two primary payments are due to WAPDA and unless these are made, WAPDA cannot make headway. He explained that there are three sources of funding the project, Public Sector Development Program(PSDP), WAPDA’s equity in the project and commercial financing. Insofar as the PSDP is concerned, for Mohmand Dam Rs.25billion were required by WAPDA during the current financial year.
However, the Federal Government only approved Rs12.1 billon under the PSDP out of which Rs2.4 billion were disbursed in the first quarter of current financial year but no payment has been made in the second quarter.
For Diamer Bhasha Dam, he stated that WAPDA had requested Rs27 billion to be allocated in the current fiscal year. This was duly approved by the Federal Government in terms of the PSDP grant and in the first quarter Rs 5.41 billion were released but the remaining amount has not been delivered in the second quarter. He lastly added that WAPDA has also committed equity in the project but such equity payment is contingent upon the Central Power Purchase Agency –Guaranteed (CPPA-G) payments being made to WAPDA. These have now accrued to about Rs. 240 billion to be paid by the Power Division.
At this juncture on Court’s query, Rashid Mehmood, Secretary Power Division, stated that the Division receives money through the CPPA-G but there is an annual gap between the figure it receives and the figure it has to pay.
According to him this year’s gap has risen to Rs.400 billion due to which the current circular debt is now Rs.4.1 trillion. He stated that this is the major reason for non-payment of requisite funds to WAPDA and added that the Power Division is taking serious steps to fill this gap and the Government is fully committed to pay the requisite amount due.
In reply, Legal Advisor of WAPDA stated that WAPDA understands the Government’s compulsion under its financial requirements. He updated the Court to disclose that there is a shortfall in certain payments that are required to be made to contractors so that they can complete their work in the given timelines. He further stated that there is also a deficit in some foreign payments that are to be made to the contractors in Euros.
WAPDA had raised Rs500 billion through Euro Bonds; however, the payments could not be processed as the State Bank of Pakistan has placed an embargo on the making foreign currency payments.
Sanaullah Gondal, Legal Head State Bank of Pakistan, and Wajahat Qureshi, Group Head National Bank of Pakistan, appeared through video link from Karachi to update the Court about the Dam Fund Accounts.
On Court’s query Gondal revealed that Rs. 10 billion initially received in the Dam Fund were invested and now on account of further contributions and re-investment in government securities and treasury bonds, this amount has risen to Rs.16.341 1 billion, which according to former Chief Justice SC Saqib Nisar, had matured to Rs 17 billion.
Copyright Business Recorder, 2023
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