The finance ministry and Wapda have locked horns over payment of tariff differential for which the latter was forced to arrange bank loans and issue Sukuk bonds, informed sources told Business Recorder.
According to Pakistan Electric Power Company, the power utility's financial gap now stands at Rs 172 billion of which Rs 72 billion were outstanding while Rs 29 billion and Rs 71 billion were receivables against Karachi Electric Supply Corporation and Fata, respectively.
The sources said the receivables issue has been discussed at a meeting on Wednesday presided by Finance Minister Dr Salman Shah wherein it was decided that the federal government would make at source deductions to clear Wapda's arrears.
The finance ministry had allocated Rs 25 billion as tariff differential in the budget 2007-08 without keeping in view the ground realities, the sources said, adding that receivables have now reached Rs 52 billion after the notification of a 10 percent increase in power tariff from February 2007.
Wapda has held the ministry responsible for its critical financial position and asked for help with at source deduction from KESC and funds allocated for Fata. The ministry is of the view that subsidy to pick up inter-Disco tariff differential amounting to Rs 17.5 billion was paid in advance.
As regards Wapda's shortfall for the period prior to notification of separate tariff, the ministry has clarified that it arranged Rs 52.3 billion bank loans to make-up for the shortfall.
The Finance Division has also released funds amounting to Rs 15.048 billion on account of subsidy for July-September 2007, therefore, no claim is lying pending with regard to inter-Disco tariff subsidy, the sources maintained.
Wapda has projected Rs 109 billion dues payable by GoP in 2007-08 (approximately Rs 9 billion per month), of which the amount of tariff differential was calculated at Rs 57.2 billion, GST refund for protected categories Rs 21.4 billion, GoP share of subsidy to Balochistan agriculture consumers Rs 3.5 billion, GoP share of subsidy to Punjab, Sindh and NWFP agriculture consumers Rs 2.6 billion, cost of Fata consumers Rs 13 billion and Rs 11.3 billion as 1/5th of Rs 46.5 billion as receivables from Fata as on June 2006.
Water and Power Minister Tariq Hamid also wrote to Dr Salman Shah, as Chairman Wapda, a couple of months ago that current financial position was not a result of some overnight incident rather it was an accumulated effect of later tariff revision (after three years), extraordinary hike in fuel prices, adverse power generation mix, adverse consumer mix and inflation. The Finance Division has stated that the cash shortfall relating to Fata has been settled.
However, Wapda is of the view that Fata receivables have reached an alarming level and continued payment defaults by the latter's consumers was affecting the flow of payments to power producers. Keeping in view the receivables situation, the finance minister is said to have agreed to release payments provisionally against power purchase price bills of NTDC/CPPA to Tesco.
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