NEPRA had allowed a raise of 11 paisas per unit in
From SHAMIM AHMED
Dec 03 - 09, 2001
The Water and Power Development Authority (WAPDA) has
once again approached the government for a 10 per cent (37 paisas per
unit) in electricity tariff from next month to enable it to effect part
of its losses during the current financial year. The increase, if
granted, will yield additional revenue of Rs.9.6 billion while the
estimated losses for the year are over 35 billion.
The National Electric Power Regulatory Authority (NEPRA)
had allowed a raise of 11 paisas per unit in Sep. last in view of the
increase in the prices of furnace oil being used by WAPDA for thermal
power generation. The furnace oil prices have increased to Rs.10,473 per
tonne till September 16, as they were 9,735 on July 1. The regulator had
also observed that net effect had increased the estimated fuel bill of
Wapda from Rs. 71 billion to Rs.75 billion for the year 2001-2002.
Keeping in view the furnace oil prices, Nepra had allowed Wapda to raise
power tariff by 11 paisa per unit.
WAPDA however, rejected the increase allowed terming
it too low to meet its financial needs. In a recent communication with
the federal government, WAPDA expressed its displeasure over NEPRA
attitude and demanded cancellation of its decision. WAPDA said that in
its view 11 paisas per unit raise in the tariff was too low as compared
to frequent increases in the prices of furnace oil.
Fully conscious of the fact that this argument is no
more valid in view of two downward revisions of furnace oil prices
during the last six weeks WAPDA has come out this time with a new
argument. It needs a raise in tariff to offset its recurring losses.
While talking to newsmen in Islamabad last week,
Chairman WAPDA, Lt.Gen. Zulfiqar Ali Khan said that the authority was
incurring a loss of over Rs.35 billion annually and they were busy in
the process of presentation at different level for a package of an
equivalent amount from the government. These measures include purchase
of low sulphur furnace oil (LSFO) from Attock Oil Refinery (ARL) and
Parco from next month as this would bring the savings to Rs. 0.9
"ARL and Parco are ready to supply LSFO at
reasonable rates, but the petroleum ministry advises them that LSFO
should be given to Wapda at the rate of imported OIL," Zulfiqar
said. He said that when the oil sector has been deregulated, why
restrictions were applied on Wapda.
Wapda has also asked the government that additional
gas, measuring 150 MMCFD, should be made available for thermal power
stations from December. The utility could save Rs.3.2 billion if its
request is implemented, he added. "If gas is made available to us,
even today, we can absorb almost 50 million units gas without any
modification of plants. Resultantly, we will import less furnace
oil", Wapda chief said. The third measure, suggested by the
utility, was that gas prices from Wapda should be charged at par with
fertilizer industry, as the utility could save Rs. 3.8 billion.
Wapda has also suggested a compensation of Rs.1.2
billion on account of subsidy, provided to Federally Administrated
Tribal Areas (Fata) and agriculture consumers of Balochistan. The fifth
measure suggested by Wapda was the conversion of Cash Development Loan
of Rs.15.5 billion into GoP equity.
"We paid Rs.22 billion to the federal government
as cash development loans, during the previous year and fulfilled our
obligations. They are demanding Rs. 24 billion during the next
year". Wapda chief said he made it clear that these loans had been
taken in the sixties and seventies, asking this liability should be
waived off, as this was not the liability which the present
administration picked up. This could be deferred or converted into
equity. Wapda was of the view that the government should convert Rs.15.5
billion into equity, while the utility was ready to pay the remaining
amount, he said.
"If the government takes all these steps, we
will not need more than 10 per cent increase in the present tariff up to
30 June which we think is reasonable," he added, requesting not
take it verbatim as this was one option.
Zulfiqar said that there could be other scenarios
which may be worked out to meet the cash shortfall adding that if the
government further reduced debt service, the proposed increase of 10 per
cent in tariff could also be reduced.
Replying to a question, Wapda, chairman said that the
utility's management paid high respect to Nepra's administration but as
regulator, it imported England's scenario as model of tariff and imposed
it in Pakistan, which was not realistic. It, is the responsibility of
Nepra to watch the interest of both the consumers and the utility,
balance the cost of fuel through different measures," he said.
While WAPDA was unhappy over the raise of 11 paisa
allowed by NEPRA, general public and industrial & commercial
consumers betterly criticised the increase in tariff after short
intervals. This was the third increase allowed by NEPRA under automatic
fuel adjustment mechanism during this year. It will be recalled that
after the first revision in March under fuel-based adjustment, the
furnace oil prices have continuously been on the decline, but the
mechanism failed to give any benefit to the consumer. When the 12 paisa
increase was allowed by Nepra under the new mechanism, the furnace oil
prices in fact declined to Rs.11.770 per ton, in March this year
compared to Rs.12,548 per ton in October 2000.
Even the current increase is quite unjustified as the
prices have since fallen by Rs.1300 per ton, which hardly provide any
justification for this decision.
WAPDA authorities should keep in mind that even the
present tariff for electricity consumption is rather on the high side
specially in view the present cost of production of the utility. Any
further increase will compel the industrial and commercial consumer to
opt for self generation while agriculturists may go for diesel operated
tubewells. As far as domestic consumers are concerned, they are finding
it difficult to pay their bills even at present rates. Any further
increase in power tariff will create general unrest besides encouraging
tendency to power theft which is already going on at a large scale. The
line losses are still the highest and billion of rupees are an
outstanding against high and powerful consumers.