$5.2 billion power sector reforms: Wapda to submit roll-out plan to Prime Minister

The Water and Power Development Authority (Wapda) is to submit roll-out plan to the Prime Minister Shaukat Aziz, envisaging specific timelines and targets to achieve the goals, official sources told Business Recorder.
The plan is being drafted on the instructions of Munawar Basir Ahmad, the new Managing Director of Pakistan Electric Power Company (Pepco) who, to satisfy the consumers, intends to introduce some measures similar to those he introduced in SSGC, sources said.
"The Prime Minister has mandated me fast track implementation of the power sector reforms, including restructuring and corporatisation," sources in Iesco quoted him as saying in his first letter to power distribution, generation companies and National Transmission and Dispatch Company (NTDC).
One of the key objectives given by the Minister for Water and Power, Liaquat Ali Jatoi, and Secretary Ismail Qureshi is to stop load shedding, minimise tripping and, consequently, improve the customer services on fast track basis.
"Admittedly, the current supply and demand scenario is in itself a Herculean task", he said, adding that "Wapda must put in full efforts to overcome the crisis-like situation and the spectre of load shedding, facing the nation in the months to come."
Sources said that Wapda would provide details to World Bank (WB) and Asian Development Bank (ADB) investment plans, according to which both donors have offered billions of dollars to the Discos, Gencos and NTDC for system improvement.
They said that ADB had raised the question with the federal government whether the power distribution companies (Discos) would be in a position to absorb the investment of $5.2 billion for 2008-2017 and pay it back within the stipulated timeframe.
Sources said that ADB Country Director and World Bank officials met Prime Minister''s advisor on finance on August 30 and September 3, respectively, and discussed the forthcoming multi-tranche loan facility for the power sector. During the discussions, ADB Country Director pointed out that overall investment in the power distribution sector would be $5.2 billion for 2008-17, and raised a few queries before finalising the pact.
The issues which the bank says need further clarifications from all concerned Discos are: details of investment, whether approval of the CDWP/ Ecnec had been obtained and what would be the impact of proposed investment and what benefits would be obtained in terms of savings and system efficiencies; whether the Discos have the capacity to absorb the investment and pay back, what would be debt equity ratio, and what were assets and liabilities of Discos? What would be its impact on tariff? How would this investment change the balance sheets of Discos? Would it be sustainable or not? Had the financial and technical analysis of such investment been carried out? And what would be the key financial and operational indicators, were main concerns of the donors.
According to sources, heads of both Wapda and Pepco would also ask the Prime Minister to allow 23 per cent increase in tariff, as was promised by the government in February when 10 percent raise was notified.
The National Electric Power Regulatory Authority (Nepra) had allowed 33 percent increase in the tariff in February last but the government notified only 10 percent with the arguments that such a huge raise would have a negative impact on the government''s performance especially when elections were near. Wapda is of the view that Finance Ministry did not pay Rs 50 billion due last fiscal as subsidy, which forced the utility to arrange funds from the commercial banks.
This issue would also come under discussion and Wapda would ask for notification of remaining 23 percent, as the same is being demanded by the Secretary Finance, Ahmad Waqar.