World Bank annoyed over freezing power tariff

06 Nov, 2006

The World Bank (WB) has expressed annoyance on freezing power tariff for the last two years, which caused above Rs 30 billion loss to the Water and Power Development Authority (Wapda), sources in Nepra told Business Recorder.
They said that a World Bank power sector mission, headed by Vladislav Vucetic, energy specialist, currently visiting Pakistan, took up the issue of tariff with the officials of Ministry of Water and Power, Nepra and Wapda.
"The mission is unhappy with the government''s not notifying tariff determinations despite giving assurance at every meeting and forum, " they added.
They said that the World Bank was of the view that the companies could not be financially restructured until new tariff was notified. They said that tariff determinations are ready with the regulator since long, but the Ministries of Water and Power and Finance had failed to finalise the subsidy issue and were using delaying tactics, citing one reason or the other.
The mission had discussed government plans of tariff notification, power sector reforms, issues related to Central Power Purchase Agency (CPPA) with Secretary, Water and Power, Ashfaq Mahmood, and reasons for delay in tariff notifications, financial analysis of power sector, budgetary support and subsidies and financial flows of CPPA were taken up with Secretary Finance Tanwir Ali Agha.
Sources said that the WB team sought viewpoint of Wapda Chairman Tariq Hameed on power sector financial situation and the remaining steps to be taken on corporatisation, which is still incomplete and even the Minister for Water and Power, Liaquat Ali Jatoi, has failed to implement the plan as was agreed with the donors.
The mission also met Nepra Chairman Saeed-uz-Zafar and sought his viewpoint over delay in tariff notifications, capacity building and other power sector related issues.
"Water and Power Ministry is not giving accurate information to the bank and is just maligning the regulator for what is not its responsibility," said another official.
An official of Water and Power Ministry also confirmed that the WB team was not satisfied with the pace of power sector reforms, especially persistent delay, in tariff notification.
According to him, the team is also reluctant to extend committed loan of $200 million to four distribution companies (discos), saying that the bank was re-channelling those loans for the development of earthquake affected areas.
The bank team, which has also consulted Iesco chief executive is scheduled to visit Mepco, Lesco, Hesco and National Transmission and Dispatch Company (NTDC) to discuss procurement procedure, ESA study, financial projections, institutional aspects, economic analysis and technical assistance requirements.
Sources said that the mission also plans to meet the donors, like Asian Development Bank (ADB) and Japan Bank of International Co-operation (JBIC), which are active participants of the power sector development.

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