WAPDA Seeks Power Tariff Hike of Up to Rs. 4.15 Per Unit

Water and Power Development Authority (WAPDA) has sought a hike of Rs. 0.47 per unit for the bulk supply of power from its hydel power stations taking it from the existing Rs. 3.68 per unit to Rs. 4.15 unit.

The National Electric Power Regulatory Authority (NEPRA) has conducted a public hearing on WAPDA’s petition for revision of tariff for 2022-23 for the sale of bulk supply of power from WAPDA hydel power stations.

During the hearing, the energy regulator noted that the value of WAPDA’s $500 million Eurobond, which was deposited with the National Bank of Pakistan, has been lowered to $312 million due to the rupee’s devaluation against the US dollar.

The hearing, which was presided over by Chairman NEPRA, Tauseef.H.Farooqui, noted that the closure of the Neelum-Jhelum Hydropower project is costing Rs. 10 billion per month, and in six months, it will cost Rs. 60 billion. Chairman NEPRA further said that Jinnah Power Plant is only generating 20 MW instead of installed 96MW. WAPDA officials responded that they are facing problems in this plant due to turbines. A turbine was shut down in 2015, and the rest are also damaged, officials said.

In its petition, WAPDA had projected an increase of 20 percent in revenue requirement for the FY 2022-23. In its tariff petition, WAPDA had requested NEPRA to determine revenue requirements of Rs. 121.808 billion for the ongoing fiscal, which is 20 percent higher than the NEPRA’s determining revenue requirements of Rs. 101.382 billion for the FY 2021-22.

It was informed that the change in components of Revenue Requirements of WAPDA Hydroelectric for FY 2022- 23, as against the NEPRA determined Revenue Requirement for FY 2020-21, has formed the basis for this Tariff Modification Petition, which had been projected with the help of Audited Financial Statements of WAPDA Hydroelectric for FY 2019-20 and FY 2020-21, actual numbers for six months (Jul-Dec) of FY 2021-22, provisional numbers for the last six months (Jan-Jun) of FY 2021-22, and budget numbers for full FY 2022-23. It is worth mentioning that WAPDA Hydroelectric’s main source of revenue stems from the sale of power to CPPA(G).

Revenue Requirements of WAPDA Power Wing Hydroelectric comprises O&M expenses, Depreciation charges, Ijara Rentals, Return on Regulatory Asset Base (RAB), and Regulatory Revenue Gap. Similarly, for the hydel levies to be paid to KP, Punjab, and AJK as NHP/WUC, WAPDA had requested Rs. 34.387 billion during the FY 2022-23.

For Payment to Indus River System Authority (IRSA), WAPDA has demanded another Rs. 157 million during the ongoing fiscal year. For the employees’ salaries, post-retirement benefits, repair & maintenance, and administrative expenses, WAPDA has projected an expenditure of Rs. 23.616 billion.

For Revenue Requirement, NEPRA has been informed that the O&M expenses have been increased from the NEPRA determined Rs. 17.622 billion for the FY 2021-22 to Rs. 23.616 billion during the ongoing fiscal. It has been projected that depreciation (Repayment of Loan & Equity) will increase from Rs. 6.869 billion FY 2021-22 to Rs. 8.025 billion. Other projections forecast the Return on Investment-HIP stations to increase from Rs. 28.330 billion to Rs. 30.385 billion, Return on Investment-HIP Projects from Rs. 21.030 billion to Rs. 34.265 billion, and Regulatory Revenue Gap from Rs. 15.515 billion to Rs. 26.285 billion during the current fiscal year.

During the hearing, WAPDA officials said that they are unable to build dams every ten years, due to which the country is facing the issue of ballooning circular debt. NEPRA sought written response from WAPDA regarding the receipt of IRSA charges in tariff.

The hearing was informed that hydropower generation has decreased in the country, which is causing losses to the consumers. Member Sindh NEPRA, Rafique Shaikh, asked the reason behind the reduction in hydropower generation, to which WAPDA official responded that Indus River System Authority (IRSA) has declared that dams are for irrigation purposes and not power generation.

A NEPRA official informed that WAPDA projected more than Rs. 23 billion for repair expenses. WAPDA’s maintenance charges are lower than other independent power producers (IPPs), the official remarked.

On another note, Chairman NEPRA said that the solution for plants that are not running is to change their payment method.