Wapda asked to raise Rs 70 billion loan

Prime Minister Shahid Khaqan Abbasi has reportedly directed Water and Power Development Authority (Wapda) to raise a loan of Rs 70 billion from commercial banks to pay Net Hydel Profit (NHP) along with arrears to KPK and Punjab after both the provinces are unhappy on undue delay in clearance of their dues, well-informed sources told Business Recorder. The decision was taken after a threadbare discussion on the issue of NHP at a meeting of Council of Common Interests (CCI) held last month.
Giving the background, the sources said that the CCI in its meeting on August 25, 2017 decided that a committee comprising the Minister for IPC as chair, Secretary to Prime Minister and Secretary CCI would hold meetings with the stakeholders to resolve this case and submit a report to the CCI. The meeting of sub-committee of CCI was held on September 6, 2017. The report of the committee was forwarded to the Prime Minister''s Office. The issue was also discussed in the IPCC meeting on October 9, 2017 and the following decisions were taken: (i) the Cabinet Division will be requested to place the summary titled "tariff determination and notification for FY 2015-16" submitted by the Ministry of Energy (Power Division) on the agenda of the next cabinet meeting; (ii) Finance Division should take the responsibility of payment of NHP along with arrears up to the tune of Rs 31.829 billion ( Rs 16.829 billion arrears of 2015-16, 2016-17 and Rs 15 billion for the five months of 2017-18) to the KPK in the spirit of the agreements signed between the federal and KPK governments. Central Power Purchasing Agency Guaranteed (CPPA-G) and Wapda shall recover this amount from the monthly recoveries of tariff; (iii) similarly, it was decided that the federal government and Wapda would ensure payment of NHP along with arrears up to the tune of Rs 38.2 billion (Rs 14.86 billion arrears, the payment of which was contingent upon finalization of tariff by Nepra), and Rs 18.5 billion regular annual NHP for 2016-17 and 2017-18 which was not, contingent upon tariff determination to the government of Punjab within the current financial year. Moreover, Nepra would process the tariff determination to ensure payment of monthly installments of NHP to the provinces as per timeline given in the report of sub-committee of CCI.
Minister for Power, Sardar Awais Leghari raised the issue of circular debt to be adjusted at source which is outstanding against the provinces. Finance Minister Punjab, however, clarified that the circular debt was ECC''s subject. She also stated that the adjustment of outstanding dues of provinces was not welcome.
The CCI was informed that a meeting under the chairmanship of the Prime Minister was held in which it was decided that arrears of NHP to KPK and Punjab shall be paid by December 10, 2017 by Wapda. Since Wapda was cash-deficient, it has to raise loans backed by a GoP guarantee from commercial banks. The Finance Division assured to provide the requisite guarantee. The secretary Water Resources said that a summary has already been moved on November 17, 2017 through the Power and Finance Divisions proposing the payment of interest to be accrued on the loan raised by Wapda for approval of the ECC.
Chief Minister KPK Pervaiz Khattak requested that the sub-committee of CCI may recommend the continuation of an interim arrangement for payment of NHP to the governments of KPK and Punjab till implementation of the AGN Kazi methodology. The committee constituted on the issue of NHP also proposed that the words "and onwards" may be replaced with the words "and the same rate may be continued as an interim rate for subsequent years till finalization of revised rates" in the minutes of CCI meeting held on December 16, 2016.
After a detailed discussion, the CCI took the following decisions ;(i) the outstanding dues of the NHP shall be paid by Wapda to the KPK and Punjab by generating loan backed by the government guarantee in accordance with the MoU signed for this purpose; (ii) the CCI also decided that the words "onwards" appearing in the CCI''s minutes of December 16,2016 be replaced with the words "and the same rate may be continued as an interim rate for subsequent years till finalization of revised rates" and; (iii) the AGN Kazi formula will be taken by CCI after the briefing to the Prime Minister by a committee having representation of Water Resources, Power, Finance and IPC.