ISLAMABAD: In two major developments on Thursday, the National Electric Power Regulatory Authority (NEPRA) decreased interest rates on hydroelectricity tariff loans to the Water and Power Development Authority (WAPDA), while the government lowered the return on its WAPDA equity to 10 percent from 17 percent at present as part of capacity reduction efforts.
As such for the current fiscal year the power regulator reserved more than Rs1.65 per unit rise in the hydropower tariff requested by Wapda. “We can’t be your partner in this crime,” said Chairman Nepra Tauseef H. Farooqui while rejecting Wapda’s request for allowing in hydropower tariff Rs11bn interest on the authority’s loans acquired for payment of Net Hydel Profit (NHP) to provinces.
During the public hearing chaired by the chairman of Nepra, Wapda management decreased its demand for a tariff increase to 93 paisa per unit instead of its initial increase of Rs1.65 per unit based on revised estimates.
Read Also: PM today to visit Turbat
Mr Farooqui said that after a thorough review of the results, a decision would be taken on the Wapda petition and the regulator would try to reduce the tariff increase. He made it clear, however that interest on loans from Wapda for the payment of revenues to the provinces would not be permissible under the tariff.
He said it was shocking that through bank borrowing, Wapda paid NHP to the provinces. He wondered, “In addition to NHP, what kind of financial prudence makes paying of income by borrowing and then the interest is often paid to customers to pay off those debts.”
He went on to say that the regulator would not allow customers to be paid Rs11bn interest on these debts.
In order to secure debt service costs through the budget or some other process, Wapda should take up the matter with the Finance Division “but we can’t be your partner in this crime,” Farooqui said.
A Wapda team told the public hearing that the federal government had agreed in 2015 to allow Khyber Pakhtunkhwa, under a structured arrangement between the federal and provincial government, Rs1.10 per unit on account of net hydel benefit. Later, a related agreement was applied to some. The deal also contained an annual rise of 5pc in the NHP rate that could not be revised.
The team said that Wapda’s new tariff stood at Rs5.67 per unit. An raise of Rs1.65 per unit to Rs7.32 per unit was sought in the tariff petition filed in August. However in the light of subsequent decisions, as part of government measures to minimise capacity costs, tariff increases of 93 paisa per unit to Rs6.60 per unit should be permitted. On account of NHP and water consumption costs, the requisite increase was appropriate.
Wapda authorities announced that the authority had hydropower plants with a capacity of 8,000MW, while further plants were currently under construction with an additional 9,000MW.
In its tariff petition, Wapda reported that it was carrying out various hydropower projects and that its revenue requirements were set at Rs71.349bn in 2017-18, which rose to Rs177.518bn in 2020-21, indicating a rise of Rs106.169bn.
Of this the cost of O&M was projected at Rs19.724bn in 2020-21, depreciation cost at Rs7.728bn, redemption of sukuk bonds at Rs1.69bn, return on investment in power plants at Rs37.163bn, return on power projects at Rs32.085bn and other income of Rs698 million, leaving a total regulatory revenue deficit of Rs68.8bn.