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Nepra holds public hearing for 121pc increase in Wapda tariff

Nepra holds public hearing for 121pc increase in Wapda tariff

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) conducted a public hearing for more than 121 per cent increase in Wapda tariff for 2015-16.

Nepra Chairman Tariq Sadozai and member Hamayatullah Khan received the Chief Minister of Khyber Pakhtunkhwa, Pervez Khattak, at the hearing that was delayed by more than 75 minutes for his arrival.

The entire parking area of the Nepra was kept vacant to accommodate the vehicles of the large VIP cavalcade.

As chairman and member of Nepra (both belonging to Khyber Pakhtunkhwa) escorted the chief minister and his delegation to the hearing hall, three other members of the regulator from Sindh, Punjab and Balochistan joined in to complete the quasi-judicial forum for public hearing.

The KP government seemed distancing from an agreement reached with the federal government in February this year seeking uncapping through the Council of Common Interests (CCI) of its net hydel profit amount of Rs6 billion and increasing it to Rs19bn under AGN Kazi formula.

The KP government, however, told the regulator that it was supporting Wapda’s request for increase in its bulk supply tariff for sale of power to national grid system from Rs1.74 to Rs3.85 per unit because it would include Rs1.10 per unit cost that would be paid to the provincial government as net hydel profit/water use charges.

Khattak told the hearing that his government was not seeking any change in the AGN Kazi formula or ratification of his agreement reached with Water and Power Minister Khwaja Asif in February to increase his province’s share from Rs6bn per year to Rs19bn.

Assisted by the KP chief secretary, Mr Khattak said his province supported a tariff petition seeking Rs1.10 per unit cost of Net Hydel Profit in its tariff for recovery from consumers.

When asked by a journalist why he was not seeking CCI ratification of his agreement with federal power minister, the chief minister said forum of Nepra was not available when the agreement was reached in February this year and hence its approval from CCI was considered important.

Interestingly, the Nepra has been functional since 1997 when CCI decided to protect KP’s NHP share despite privatisation programme.

A senior Wapda executive Anwarul Haque told the Nepra that the utility used to pay Rs6bn per year to KP under a 1991 AGN Kazi formula approved by the CCI and was instructed by the ministry of water and power to charge Rs1.10 per unit cost to consumers to pay for net hydel profit/water use charges to provinces and Azad Kashmir.

Accordingly, the share of KP on this account would increase to Rs18.8bn from Rs6bn while the Punjab and AJK would start getting Rs9.5bn and Rs6.5bn on the basis of Rs1.10 per unit NHP/WUC cost.

He said the Wapda was not aware of the basis of this charge, but this would require Wapda to have Rs35bn revenue during 2015-16.

The Wapda’s upfront tariff would then go up from Rs1.74 per unit in 2013-14 to Rs3.85 per unit for fiscal year 2015-16.

An intervenor Azhar Masud Panni adopted before the regulator that imposition of this charge without approval of the CCI would be unlawful.

He said the NHP should have calculated on profit earned on power delivered to Wapda at the bus-bar and not through various surcharges, special surcharges and now new NHP/WUC charge out of consumers pocket.

KP member Nepra Hamayatullah Khan questioned how AJK be treated like provinces in the matter of Rs1.10 per unit charge when the territory was outside the jurisdiction of the constitution of Pakistan and was not covered under the Nepra Act.

He was told that Nepra had approved Mangla power contribution in Wapda’s generation licence from which 1,000MW electricity was being transmitted to the national grid and more projects like Neelum Jhelum were coming up.

It was stated that it would be highly unfair and unjustified to draw economic benefits from AJK through legal means and deny it water use charge that could have gone to any other entity if the Mangla dam was only 10kms downstream.

The Wapda reported increase in Regulatory Assets Base from Rs221bn to Rs381.5bn due to more capital investment in the ongoing projects.

It said the requirement for payment on account of NHP/WUC had increased from a total of Rs6.8bn two years ago to Rs34bn for this fiscal year.

The hearing was also told that Nepra’s regulatory fee had also increased from Rs76 million in 2013 to Rs146m.

It was also reported that KP had already been paid Rs110bn committed by the federal government on the sidelines of the 7th NFC award in 2009.

The KP government argued that Kazi bormula could have increased its NHP share to Rs70bn per year by now but this was never implemented through various means and the previous KP government had agreed to the rate of Rs1.10 per unit in a spirit of accommodation.

It confirmed Rs110bn were paid to KP by the centre under political compulsion.

Published in Dawn, September 9th, 2015

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