ISLAMABAD: Water and Power Development Authority (WAPDA) has sought Power Division’s intervention for payment of outstanding receivables of over Rs 236 billion from Central Power Purchasing Agency–Guaranteed (CPPA-G).
On March 25, 2022, WAPDA wrote a letter regarding piling up of WAPDA hydroelectric receivables which have now swelled to Rs. 236.119 billion. WAPDA took up the case in the correspondence to increase its bare minimum monthly energy need of Rs7.50 billion against the current release of Rs 5 billion by CPPA-G.
WAPAD’s Member Finance, Naveed Asghar Chaudhry, wrote a letter to Secretary Power Division, copies of which have also been sent to Secretary Ministry of Water Resources, Secretary, Finance Department, KP, Secretary, Finance Department, Punjab and Chief Executive Officer (CEO), CPPA-G
The receivables breakdown is as follows: (i) energy receivables- Rs 85.307 billion; (ii) NHP payable to provinces- Rs 61.281 billion (GoKP- Rs 3.077 billion and GoPb Rs 58.204 billion); and (iii) loans payable to Federal Government – Rs 89.531 billion.
According to Member Finance (WAPDA), CPPA-G apart from WAPDA energy component of Rs5.0 billion was releasing approx. Rs3.0 billion for onward payment to Government of Khyber Pakhtunkhwa (GoKp) and approx. Rs.300 million to Government of Punjab on account of Net Hydel Profit (NHP). However, after December 2021, CPPA-G has substantially reduced NHP share and during the month of March, 2022 it only released Rs.230 million for NHP, which is insufficient to clear the over dues created as a result of non- payments by CPPA-G. The provinces are also pressing hard for clearing their over-dues as it effects their budgetary allocations.
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“Delays in CPPA-G payments has a debilitating impact on the progress of its development projects of strategic national importance besides undermining WAPDA’s capacity to meet essential payments including O&M expenses, pension fund and debt servicing of its commercial loans,” he added.
Finance Division, in a letter of March 2, 2022 has referred to the meeting with the Minister for Finance and Revenue on January 2, 2022 whereby CPPA-G was asked to clear 10% of the WAPDA’S receivables in March, 2022 and to work out a schedule for clearance of remaining amount through instalments beyond June, 2022; however, this is still awaited.
CPPA-G is currently making monthly payment of Rs5.0 billion to WAPDA against its hydroelectric invoice(s). However, WAPDA’s bare minimum monthly requirement is Rs.7.50 billion due to scheduled debt servicing liabilities in respect of Credit Suisse Loan of$ 350 million and Green Euro Bond of $ 500 million, Member Finance maintained.
After explaining the case, Member Finance WAPDA once again requested that CPPA-G may be directed to henceforth make monthly payment of Rs7.50 billion to WAPDA against hydroelectric invoice(s) besides immediately clearing overdue WAPDA Hydroelectric receivables of Rs.236.12 billion at the earliest enabling WAPDA to meet its operational and development needs.
Earlier, Government of Khyber Pakhtunkhwa (GoKP) informed the Federal Government that WAPDA is not paying the agreed amount of NHP as per the understanding between both the federal and provincial governments.
According to Secretary Finance KP, Ikram Ullah Khan, a decision taken in a meeting held on November 24, 2020 under the chairmanship of Federal Minister for Energy (Power Division) which was attended by the Secretary Power Division wherein WAPDA agreed to transfer Rs. 3 billion per month in lieu of NHP to Government of Khyber Pakhtunkhwa.
The question of direct transfer of NHP from CPPA-G to GoKP was raised during the meeting and legal hindrances to its implementation. The meeting was informed that currently NEPRA has allowed WAPDA the NHP tariff and therefore CPPA-G has to pay the amount to WAPDA.
The provincial government maintained that as per agreed arrangement with WAPDA, the Provincial Government has projected a sum of Rs 29.574 billion for the Financial Year 2021-22 on account of regular NHP but unfortunately the commitment made for the payment of Rs. 3 billion per month is not being complied with by WAPDA fully from January, 2022 onwards and instead WAPDA has reduced it to Rs. 1 billion per month unilaterally since then.
The Government of Khyber Pakhtunkhwa has claimed that it has so far received a sum of Rs.9.130 billion only against the projected estimates of Rs. 29.574 billion for current financial year. Thus, leaving balance amount of Rs. 20.444 billion which is yet to be paid by WAPDA/ Federal Government till close of current financial year in June, 2022.
Secretary Finance KP has requested Secretary Power Division to intervene in the matter and issued directions to the quarters concerned in WAPDA to ensure payment in accordance with the decision by clearing of arrears of Rs. 6 billion for the months of January-March 2022 (Rs 2 billion each) and to resume payment of Rs. 3 billion per month for the remaining period of current financial year 2021-22 (i.e., April to June).
Copyright Business Recorder, 2022