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July 14, 2020

Power consumers to pay interest payments thru tariff on loans

Top Story

July 14, 2020

ISLAMABAD: The electricity consumers will pay the interest payments through power tariff on commercial loans obtained by Wapda for paying the net hydel profit to Punjab and Khyber Pakhtunkhwa.

In this connection, a summary of Wapda hydel will be pitched in the next meeting of Council of Common Interests (CCI) that is scheduled on August 6. The CCI meeting of August 6 is set to approve the move of the government under which electricity consumers will pay the interest payments in the power tariff on the bilateral Islamic and commercial loans obtained by Wapda.

The CCI meeting held on December 23, 2020 approved Wapda structure with the decision that Wapda chairman will be appointed through rotation from all the provinces with no executive powers, rather he will be bound to oversee policy formulations.

Members of the Authority would also oversee policy formulations. However, federal government will appoint Wapda CEO and relevant professional staff with executive powers and run the show and more importantly organisation shall be restructured to ensure corporate governance in Wapda.

According to decision, the CCI decided that ministry of water resources shall prepare recruitment regulation for Wapda in consultation with provinces keeping in view following principles that include 1) Organisational Organogram shall be restructured to ensure corporate governance in Wapda 2) chairman and members with no executive powers shall be appointed to oversee policy formulations 3) CEO and relevant professional staff shall be appointed by the federal government and 4) chairman of the Authority shall be appointed through rotation from all provinces.

However, ministry of water resources has objected the decision taken on December 23 by CCI and will pitch its argument against the decision in next CCI meeting to be held on August 6. Ministry of water resources will pitch its arguments saying that the decision has the potential to further dilute the federation rather than strengthen and can trigger more inter and intra-provincial differences, especially when water is already a devolved subject, the federation has no control to ensure the successful completion of water sector projects for which funds are provided from federal PSDP.

Ministry of water resources further said political representation in Wapda will create conflict rather than cooperation and will jeopardise techno-economic merits of development of water and hydropower resources. Now under the new scenario, decision making from Authority will be shifted to one CEO.

Some independent water experts of the country opined saying that the decision is ridiculous as Wapda was made under 1958 Act through legislature by Assembly of West Pakistan which government of Pakistan adopted. Wapda’s structure cannot be changed through CCI but through Parliament as Wapda is the product of Act approved by Assembly, said ex-chairman who also served as secretary in various ministries and held important posts. He argued saying: ‘Since Wapda does not make business out of the water stored in Tarbela, Mangla dams and surely when from Daimer-Bhasha Dam when it will get completed, so it cannot be run on structure with corporate outlook as suggested by CCI. They also contested the decision in which Wapda chairman and members will oversee policy formulation saying Wapda is an executing agency and implements the projects under the government policy. He mentioned the fact that even it cannot make the project whenever and wherever it desires, rather it is water resource ministry which recommends the site for project that is examined and approved by Planning Commission with inputs from finance and EAD ministries because of local and foreign funding issues. Ministry also said strategic development of Mohmand Dam, Dasu HPP and Diamer Basha Dam is entirely dependent on the financial model of chipping in over Rs700 billion in next 7 to 8 years through Wapda’s equity and asset based commercial financing. Any move to restructure the Authority will unhinge the entire edifice putting the fast developing potential to jeopardy.

The mandate of Wapda is even of greater importance in view of 18th Amendment where 60% resource is given to provinces and federation handles strategic projects with 40%.

The development concept of Wapda already entails construction of mega projects in company mode where a management company has been raised with CEO from the market for future project. And in the above context, it can be stated that the idea discussed in CCI’s 41st meeting held on 23.12.19 to create a BoD and place Wapda under the said BoD is inherently flawed on following grounds, which if implemented would result in serious implications such as a) Pakistan needs robust institutions rather commercially structured companies in view of socio-economic conditions and the need for handling issues of national security by federation.

Ministry is of the opinion that the current structure of Authority as envisaged in Wapda Act 1958 must stay intact. And to make Wapda as a more robust institution, NTDC be placed once again under Wapda to have an integrated planning of evacuation of power from remotely located hydropower projects, few of which like Diamer Basha and Mohmand are under construction and Bunji, Thakot and Pattan are planned during next 25 years.

National Water Policy’s Steering Committee (NWP-SC) is a forum which already exists since the CCI approved it as part of National Water Policy. The NWP-SC is headed by the federal minister for water resources and includes among others five federal secretaries, seven secretaries from the four provinces, AJK and GB as well as chairman PEC, Surveyor General of Pakistan and NDMA chairman.

This committee may deliberate and suggest Wapda to develop any scheme essential for the country as outlined in the national water policy.

Ministry further said in order to improve the implementation of mega and strategic projects, Wapda will create respective management companies, as it has already done in case of Diamer Basha Dam project.