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Wapda wants further raise in consumer tariff

09 July, 2007

ISLAMABAD: A cash-hungry Water and Power Development Authority (Wapda) is again persuading the government for raising its consumer tariff to improve its financial health. "Rationalise consumer end electricity tariff or allow automatic adjustment on quarterly basis to improve utility's financial health and reduce burden on the GoP," said Wapda Chairman Tariq Hamid in a letter to Finance Secretary.

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ISLAMABAD: A cash-hungry Water and Power Development Authority (Wapda) is again persuading the government for raising its consumer tariff to improve its financial health. "Rationalise consumer end electricity tariff or allow automatic adjustment on quarterly basis to improve utility's financial health and reduce burden on the GoP," said Wapda Chairman Tariq Hamid in a letter to Finance Secretary.

The letter, a copy of which was made had been written to Tanwir Ali Agha, who is the future Auditor General of Pakistan. Wapda is of the view that the burden would further increase, unless shifted to the consumers, on account of rising trend of furnace/diesel oil dependence on thermal energy, rather than hydel energy, to meet the growth demand of 10 percent per annum.

Sources said that a summary has already moved to the Economic Coordination Committee (ECC) of the Cabinet to seek GoP's guarantee for loans from commercial banks.

According to Wapda, demand of electricity was increasing at 8 to 11 percent annually since last notified tariff (November 2003). Fuel prices were on constant rise: 96 percent increase in RFO and 54 percent in gas prices since November 2003 while 75 percent increase in O & M expenses due to system expansion and normal inflation.

Consumer-end tariff remained stagnant during November 2003 to February 2007 whereas cost of electricity increased by 39 percent during this period and Nepra tariff determined in February 2007 has increased by 32 percent only. Out of this, 10 percent has been passed on to consumers whereas 22 percent has been assumed by GoP by way of subsidy, sources added.

The utility further said that KESC was not paying according to Nepra determined rate of tariff, and the amount had jumped to Rs 20 billion, while FATA's outstanding amount is Rs 63 billion and is increasing at the rate of Rs 12 billion per annum. Supply from gas companies is 40 percent less as compared to last year; as a result, proportionately more oil had to be used, the utility argued.

It further said that tariff notification, payment of subsidy, approximately Rs 18 billion for the period 24 February to 30 June 2007, was assumed by GoP without imposing any stipulation. "The current arrangement of short-term loans by GoP for Wapda is a bridge finance," Wapda Chairman said, according to sources.

They said that Wapda has also suggested reduction in the capital expenditures of each 'disco' by 10 percent taking previous year as benchmark, and added that 'discos' would meet their additional capital expenditures as loans of commercial banks are matured. Wapda also appreciated Finance Ministry's support in addressing financial crisis including presentation to Prime Minister.


 
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