The National Electric Power Regulatory Authority (NEPRA) will hold public hearing on the Water and Power Development Authority (WAPDA) tariff application on May 5, in which an increase of Rs 3.01 per unit has been sought in hydel tariff to pay off Rs 51.1 billion in net hydel profit (NHP) to Khyber Pakhtunkhwa (KP).
NEPRA has framed three issues for the hearing. It has asked WAPDA Hydroelectric whether the nature of NHP arrears of Rs 25 billion and Rs 15 billion is fixed or variable. It had allowed an interim tariff of Rs 1.10 per unit on KP generation for this fiscal year. NEPRA has said that if Rs 9.2 billion are claimed on account of current NHP, it should be reconsidered with new petition or next tariff petition. It has also asked if interest payment of Rs 1.87 billion on Rs 25 billion is justified.
According to the petition, the federal government and the KP government signed a memorandum of understanding on February 25 which allowed uncapping of NHP to KP and settled the past arrears. The Council of Common Interests (CCI) also concurred with the MoU and directed WAPDA to file a tariff petition.
NEPRA had allowed increasing NHP from Rs 6 billion to Rs 18.7 billion per annum to KP on the WAPDA hydroelectric bulk supply tariff petition on November 13, 2015 for the current fiscal year, as an interim arrangement. It was to be fulfilled through an increase of Rs 1.10 per unit in hydel power tariff.
WAPDA says its NHP arrears till March 6 amounted to Rs 9.2 billion as the federal government notified the NEPRA decision on March 7. It said that for clearing the past NHP arrears of Rs 25 billion it took a bank loan at 7.5 per cent interest rate which caused additional charges of Rs 1.87 billion. While Rs 15 billion are to be paid in NHP to the province in the next fiscal year.
The total arrears amount to Rs 51.17 billion. In order to reduce the upfront impact on the tariff, the whole of the NHP arrears should be recovered on 12 month generation, the petition states. A total of nine hydel power units exist in the province, the major one being Tarbela with 3,478 MW potential.
The federal and KP governments had agreed on NHP arrears of Rs 70 billion, which was to be paid in four installments. The first installment was of Rs 25 billion while the other three are supposed to be Rs 15 billion each.