Water and Power Development Authority (Wapda) has reportedly sent a summary to the Ministry of Water and Power for subsequent approval by the Council of Common Interests (CCI) on the recovery of interest on Rs 25 billion paid to KPK as Net Hydel Profit (NHP), sources close Member Finance (Wapda) told Business Recorder .
The federal government through a Memorandum of Understanding (MoU) of February 26, 2016 with Government of KPK, in a resolution of pending issues, had agreed to pay Rs 70 billion as arrears, out of which Rs 25 billion was agreed to be paid by June 2016. The CCI in its meeting on February 29, 2016 directed Wapda to take the burden of Rs 25 billion and file a tariff petition to recover arrear amount as agreed.
The Ministry of Water and Power through a letter on March 28, 2016 directed Wapda to take a loan of Rs 25 billion and file a tariff petition to recover the loan amount as well as interest cost through tariff. Accordingly, Wapda filed a tariff petition to Nepra which allowed the recovery of Rs 25 billion in installments in 12 month but did not allow recovery of interest cost advising Wapda to get approval of the CCI for this purpose.
The determination of Nepra in this regard was notified on June 24, 2016. Wapda obtained a loan of Rs 25 billion from Meezan Bank on June 21, 2016 and remitted the funds to the Government of KPK. Wapda had invoiced Rs 23.401 billion - from June 21, 2016 to May 2017 -however Central Power Purchasing Agency (CPPA-G) has not released any funds against the billed amount. Wapda from its own resources paid 6 month mark-up of Rs 722 million in December 2016. The loan amount of Rs 25 billion along with 6 monthly mark-up of Rs 722 million was due on June 21, 2017 for payment and it is unclear if CPPA paid the required amount to Wapda or not.
The sources said Nepra has not allowed the recovery of mark-up on loan amount of Rs 25 billion and has directed Wapda to seek the approval of CCI for this purpose. Wapda has already sent a summary to the Ministry of Water and Power for CCI approval which is still awaited.
The government of Khyber Pakhtunkhawa recently sought a 400 percent increase in Net Hydel Profit (NHP) from current Rs 1.10 per unit to Rs 5.38 per unit whereas Wapda has sought an increase in hydel tariff by 98 percent or Rs 3.61 per unit - from Rs 3.69 per unit to Rs 7.30 per unit for FY 2017-18 to meet financial obligations and other expenses. Nepra has not yet issued its determination on Wapda's petition.