WAPDA has suggested six alternatives if the cash
package is not made available.
Sep 24 - 30, 2001
After having failed to convince the National Electric
Power Regulatory Authority (NEPRA) that a further raise in power was
justified, the water and power development authority (WAPDA) has now
sought a Rs.40 billion cash package from the federal government to
offset its deficit for the current financial year, sources in the
Finance Ministry revealed to this correspondent.
WAPDA, which has directly approached the Chief
Executive Secretariat has suggested six alternatives if the cash package
is not made available including a 32 paisa increase in the existing
The utility has apprised the Chief Executive
Secretariat that at present the Kot Addu Power Company (Kapco) is
purchasing imported furnace oil with low sulphur (LSFO) content from
Pakistan State Oil (PSO). Attock Oil Refinery (ARL) has a low content of
sulphur, however, the price of the furnace oil produced at ARL is at
present equivalent to the price of HSFO sold to PSO.
WAPDA, in communications with the Chief Executive
Secretariat, has said that if the required quantity of furnace oil used
in power generation was made available to Kapco from ARL and also
Pakistan Railways commits to transport the same from Attock to the
Lalpir depot, the utility would save Rs.3,000 per metric tonne. This
would bring savings to the tune of two billion rupees on account of
energy payments by WAPDA to Kapco.
The utility said the various gas consumption of WAPDA
plants located in the northern zone is 400 MMCFD, but the average gas
supply on these plants is approximately 250 MMCFD. Therefore, additional
gas measuring 150 MMCFD could be consumed at the WAPDA thermal power
plants. Guddu power plant could also consume additional 100 MMCFD gas.
If gas is made available to WAPDA thermal power to the extent of 250
MMCFD, cash saving of Rs. 9.2 billion can be achieved. However, the
utility has asked the Chief Executive Secretariat that direction may be
issued to the concerned ministry for necessary measures in this regard.
The third measure, which was suggested by WAPDA, was
that gas prices from WAPDA should be charged at par with fertiliser
industry as WAPDA could save Rs. 6.9 billion on this account. WAPDA has
also suggested a compensation of Rs. 2 billion on account of the subsidy
being provided to the Federally Administered Tribal Areas (Fata) and the
agriculture consumers of Balochistan.
The fifth measure suggested by the utility was the
conversion of its Cash Development Loan (CDL) of Rs. 4.3 billion into
the government of Pakistan's (GoP) equity. The sixth and main demand of
the utility was raise of 32 paisa per unit in the existing tariff from
July last as this step could provide a relief of Rs. 14.9 billion to the
On the other hand WAPDA Chairman Lt. Gen. Zulfiqar
Ali Khan, in a public address, boasted that WAPDA has earned Rs.176
billion in the previous fiscal year while it has saved Rs.27 billion
through cut in line losses during the last 30 months. "WAPDA has
earned an income of Rs.176 billion during 2000-01 against the target of
Rs.163 billion" he said while inaugurating 132 KV Bhagwal grid
station, some 33 kilometers from Chakwal.
Gen. Zulfiqar said, the present administration
started with the annual revenue of Rs. 92 billion in the year 1998-99.
In the subsequent years, it continued to rise and last year, the
Authority earned Rs. 176 billion, showing an increase of 80 per cent
revenue in the last 30 months. Similarly, he said, 30 months ago the
line losses crept to 42 per cent which was gradually brought down and in
the previous fiscal year it was registered at 25 per cent. It is a big
achievement as one per cent of line loss translates into Rs. 1.6
billion," he said
Gen. Zulfiqar said a total of 35,000 kilometers long
high-powered transmission line was laid in the last 30 months which is a
record in the WAPDA's history. Likewise, he said, 18 per cent new
consumers have been brought into the WAPDA's net "which is a very
high ratio by any standard when compared with the past ratio."
Later, talking to reporters, the WAPDA Chief
dismissed assertion of any substantial increase in power rates. In May,
1999 he said the electricity rates were Rs. 3.48 per unit which today
stands at Rs.3.57 per unit. "It is despite the fact that prices of
furnace oil, the major input, has gone up by 140 per cent since then,
besides raise in the gas rates." He said the raise in per unit cost
is due to levy of 15 per cent General Sales Tax and Withholding Tax by
"Last year, we paid Rs. 32 billion to the
Central Board of Revenue (CBR)", the WAPDA chief said and added his
organisation has submitted a number of recommendations to the government
to bring down the electricity prices. These include a complete
deregulation of furnace oil import and supply of additional gas to the WAPDA.
WAPDA, is the largest consumer of the furnace oil and
last year it bought 1.5 million tonnes of oil. Similarly, it has the
capacity of using an additional 250 million cubic feet of gas, he said
adding "gas prices have gone high but if WAPDA is given gas at the
subsidised rates, as in the case of fertilizer, the power rates can be
WAPDA was paying Rs.26 billion to the government as
interest on the past liabilities and "if it is deferred and coupled
with improving efficiency, the power rates can be reduced despite hike
in prices of furnace oil", he added.
Despite all these boastful claims of the Chairman the
fact remains that financial position is far from satisfactory. The
troubles faced by WAPDA due mainly to its weak financial position appear
to be assuming serious dimensions. The utility is urgently in need of
Rs.40 billion as a loan or some sort of financial assistance from the
federal government not only to meet its immediate payment liabilities to
its creditors but also to initiate new development projects especially
in the hydroelectric generation sector. The precarious financial
position of WAPDA may be rather surprising for many, when judged in the
light of the recent claim by its chairman about wide-ranging
improvements in the Wapda's performance over the last two years since
the takeover of the management by the army.
The fact, however, remains that WAPDA is not well
financially. One of the causes of the financial ailment, as stated by
the chairman, was the recent refusals by National Electric Power
Regulatory Authority (Nepra) to allow a raise to WAPDA in power tariffs
for various types of consumers. The WAPDA chairman is also reported to
have requested the visiting IMF mission to exert pressure on the federal
government and the Nepra to yield to its request for at least 32 paisa
increase in per unit tariff. It is regrettable that while various
sections of the society are vehemently opposing the pressures from the
donor agencies for multifarious purposes, WAPDA is trying to use the IMF
level to get its demand fulfilled.
The conclusion that one draws from the WAPDA episode
is that merely changing one set of managements personnel for another is
not what is needed. What matters is the fairness and uniformity of
policies and transparency, openness and accountability in procedure.
What ails WAPDA is the discriminatory determination of tariff, partial
treatment reserved for certain influential groups of consumers, allowing
them to accumulate arrears and then writing these off of one contrived
ground or another, lax enforcement of discipline among the employees and
indifference towards the service delivery system. In short, the utility
is a commercial organisation but it is not being run on sound commercial
principles — focusing always on efficiency, profit and customer
satisfaction — and unless that is done WAPDA will remain as
inefficiently run and insolvent an organisation as it has been all these