NHP payment to Punjab: Wapda irked by delay in issuance of promissory note by MoF

Water and Power Development Authority (Wapda) is reportedly annoyed with Finance Ministry for delaying issuance of promissory note with an unconditional and irrevocable guarantee to arrange Rs 38 billion from banks to pay the first instalment of net hydel profit (NHP) to Punjab from 2005 to 2016, well-informed sources told Business Recorder from Lahore on Thursday.
Under the agreement signed between Wapda and Punjab at the Prime Minister's House, Punjab would be paid Rs 82 billion for power generated by the Ghazi Barotha Hydropower Project (GBHP) since 2005. Of this, Rs 38 billion would be settled upfront and the remaining Rs 44 billion would be paid in the next three fiscal years at a rate of about Rs 14.5 billion per year. The Wapda will continue to pay Rs 9.5 billion to Punjab every year for the productive life of the project.
Ghazi Barotha with a generation capacity of 1,450MW is the main hydro-power project in Punjab. The GBHP is run of the river project completed in 2004-05. Other seven projects, for which Punjab is demanding NHP include Chashma Hydropower Project (184MW), Jinnah Hydropower Project (96MW), Rasool Hydropower Station (22MW), Chichoo Ki Malian project (13.2MW), Nandipur project (13.8MW), Shadiwal project (13.5MW), and Renala Khurd project (1.1MW).
The sources said the government of Punjab has sent a couple of reminders to Wapda's top brass urging for payment of Rs 38 billion before December 31, 2016 as was agreed in the meeting in written. According to sources, Wapda would increase future tariff by 1.10 per unit across the country to pay Rs 82 billion to Punjab as NHP in four instalments as was done in case of KPK. However, average increase in consumers' tariff would be Rs 0.82 per unit when entire hydel generation from eight projects is divided on Rs 82 billion.
The sources said the Wapda is preparing a new petition for increasing hydel tariff to pay NHP to Punjab as well as for Neelum-Jhelum hydroelectric project whose cost is expected to reach Rs 464 billion. Wapda would file a new tariff petition in January 2017. The hydel tariff which presently is around Rs 4.89 per unit would jump to Rs 7-8 per unit after determination of proposed tariff of Wapda. The Wapda has to seek approval for tariff raise from the Council of Common Interests (CCI).
The sources said the newly-appointed Chairman Wapda Lieutenant General Muzammal Hussain (Retd) initially agreed to pay the amount of NHP including arrears but later on tried to back out from the commitment. However, he could not resist before pressure from Punjab Chief Minister Shahbaz Sharif who has held two one-on-one meetings with the new chairman. However, when the Chief Minister Punjab took his "traditional" stance in meeting at the Prime Minister's House, Chairman agreed to pay the entire amount of NHP along with arrears.
At present, the consumers pay Rs 19 billion every year to KP as NHP at the rate of Rs 1.10 per unit under an agreement approved by Nepra in November last year. At the time, the regulator had, however, not approved requests for Rs 9.5 billion NHP payment to Punjab. It is pertinent to mention here that Chief Minister Punjab has a 'potential say' in all energy sector projects.