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11-24-2017, 03:40 PM
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Rs277b fleeced from power consumers on two hydropower stations
ISLAMABAD: As much as Rs277 billion has been fleeced from the electricity consumers as net hydel profit on just two hydropower stations ? Tarbela and Ghazi Barotha hydropower projects ? and the said huge amount is used for subsidising the expensive power plants, reveals the Additional Note written by Member Tariff in Nepra Himayatullah Khan in the determination on bulk supply tariff for Wapda hydel for financial year 2017-18.
Khan in the determination, while giving his input on the question as to whether NHP related to provinces should be passed to consumers through the tariff, said that under the interim arrangement, of fixed NHP @ Rs1.10 per unit indexed at 5 percent per annum, there is no other option but to pass on the amount to end consumers. However, having said that, it is important to point out that the end consumers are already paying Net Hydel Profit in the monthly bills. This amount is collected by the DISCOs and passed on to CPPA-G from where it is diverted towards payment to expensive power stations. In his note, Mr Khan argued saying NHP can be defined as, the difference between the sale price ( the price which the consumer pays) and the generation cost of a unit of electricity, produced by a particular hydel station. Note says: "If we take the case of Tarbela and Ghazi Barotha Hydro power Project (GBHPP), a unit of electricity is generated at approximately Rs0.64 per unit and Rs1.85 per unit respectively, while the consumer actually pays © Rs11.45 per unit, yielding Rs10.81 per unit and Rs9.60 per unit as net profit, for each station. If we take roughly 15,000 GWh produced by Tarbela and 6808 GWh by GBHPP, during 2016-17, the consumer has already paid into the system approximately Rs227 billion as NHP, on these two stations alone.? However, the note unfolds that instead of this amount being paid to the provinces as NHP, it is being diverted towards subsidizing the power sector. This amount goes towards payments to expensive power generating units, such as, Wind (Rs. 22 per unit), Solar (Rs. 20per unit), Bagasse (Rs. 13 per unit), IPP (HSD Rs. 22 per unit) and public sector GENCOs, at the expense of the provinces. The Note argues on the issue whether Wapda is deviating from Kazi Formula while making payment to provinces on account of NHP without sanction of the CCI saying that the existing tariff methodology is not justified on two counts: Firstly, it precludes determination of Net Hydel Profit (NHP) in accordance with Article 161(2) and its Explanation of Constitution of Pakistan, 1973. It also does not allow computation of NHP on the basis of Kazi Committee Methodology (KCM) which was duly approved by the Council of Common Interests (CCI) in its meeting dated 12th January, 1991 and reiterated in its meetings dated 12.09.1993, 25.05.1997 and 22.12.1998. Secondly, it is an annual and a cost-plus based methodology rather than a multiyear revenue-minus cost based methodology. This methodology denies Wapda the requisite space and freedom to fully finance its investment and operation & maintenance requirements. On a question as to whether there should be one bulk license and tariff for Wapda Hydroelectrics, 19 operating Hydel stations and 5 upcoming Hydel projects or 24 individual licenses and tariffs, Mr Khan in his note said, Nepra is allowing Wapda to operate 19 existing and build 5 new hydro power stations under one bulk supply license, since 2004. Wapda has been allowed to charge a single tariff that is based on the average cost of all the power stations and projects taken together. It must be appreciated that each existing power station has a different operation and maintenance cost which is financed through a distinct capital structure i.e. debt and equity. A bulk tariff mixes the unique cost profile of each power station into one basket which is against the principle of transparency. Mr Khan said in his opinion, each of 19 stations should have a separate license for which NEPRA should allow a tariff that is representative of its specific and unique prudent operating costs. Similarly, the 5 future power stations especially, the bigger ones like Diamir Basha, Dasu and Neelum Jhelum should be given separate licenses and tariffs. This is absolutely essential for the sake of transparency, efficiency, accountability and effective monitoring of the performance of each hydel station. Under the existing arrangements inefficient and loss making stations are being subsidized by low cost or profit making stations. On the issue as to whether NHP can be converted into a fixed rate of Rs1.10 per kwh keeping in view clause 161(2) of the Constitution, Mr khan says that Article 161(2) of the Constitution provides "The net profits earned by the Federal Government, or any undertaking established or administered by the Federal Government from the bulk generation of power at a hydro-electric station shall be paid to the Province in which the hydro-electric station is situated. He explained that "net profits" should be computed by deducting from the revenues accruing from the bulk supply of power from the bus-bars of a hydroelectric station at a rate to be determined by the Council of Common Interests, the operating expenses of the station, which shall include any sums payable as taxes, duties, interest or return on investment, and depreciation and element of obsolescence, and over-heads, and provision for reserves. There is therefore no provision in the Constitution for a pre-determined fixed rate of NHP, to be applied uniformly across the board, to all hydro power stations without taking into consideration the revenues or expenses of that particular station. Moreover, by applying a notional fixed NHP rate, certain loss making stations would also be shown generating a net profit which would not be a true reflection of the state of affairs of that station. At best, a fixed NHP rate, as in the instant case, can be applied only as an interim arrangement and not as a permanent dispensation. Mr Khan's note also points out that the CCI in its meeting dated 29.02.2016 made the decisions according to which CCI gave its concurrence to the MoU signed between Government of Pakistan and Government of Khyber Pakhtunkhwa on 25th February 2076 specially directing WAPDA to file a Tariff Petition as agreed in the MoU. Punjab will submit their claim to Ministry of Water and power for consideration in the light of said MoU. In the light of para (iii) of its decision dated 29.02.2016, the CCI approved the summary of the MoW&P on the subject "Settlement of Net Hydel Profit (NHP) issue between Wapda and Government of Punjab" in its meeting dated 16.12.2016. The CCI, inter alia, approved the proposal of "payment of NHP to Government of Punjab @ 1.10 per unit on the analogy of Government of KP, generated from Hydel power stations located in Punjab for the FY 2016-17, and onwards". The Chief Minister, KP, during CCI meeting dated 16.12.2016, expressed reservations on the wordings of the minutes and asked for deletion of the words "and onwards", as these referred to a "temporary / interim arrangement and not permanent arrangement to cover coming periods." The CCI agreed to delete the words, "and onwards". It is abundantly clear from the above, that the ground on which the words, "and onwards" were deleted was on the basis of the reservations expressed by the Chief Minister, Khyber Pakhtunkhwa, emphasising the temporary / interim nature of the arrangement which could not be construed to be a permanent arrangement. Any attempt to use deletion of the two words, "and onwards", as sufficient grounds for disallowing NHP charges as claimed in Wapda tariff petition 2017-18 is a complete misperception of the spirit of the CCI decision and could be construed as a classic case of "lawless legality", where the spirit of the law is not taken into consideration, while interpreting the law. It may be added that no stakeholder, at any stage whatsoever of the tariff proceedings has ever asked for stoppage of NHP payment. Neither the petitioner nor any of the interveners, commentators or Ministry of Water & power asked for discontinuation of NHP payment. This would also amount to a violation of Article 161(2) of the Constitution, which provides that NHP "shall" be paid to the provinces. Being a mandatory stipulation of the Constitution, NHP has been regularly paid to KPK ever since 1991 ? albeit, at a provisional and capped amount of Rs. 6 billion per annum. The Authority had earlier also expressed its concern at para 64 of tariff determination for FY 2015-16 that such interim arrangements cannot be allowed to continue in perpetuity and expressed the need for arriving at a permanent arrangement. On the issue as to whether Constitution intents and prescription of determination of NHP and its collection can be modified by the CCI, Federal Government, Wapda or Nepra, the note responds saying that the answer to this issue is very simple. The "Constitution intent and prescription of determination of NHP and its collection" is very clearly and unambiguously spelt out in Article 161(2) and its Explanation. Any modification or amendment of the Constitution is the exclusive domain of Parliament. The CCI, federal government, Wapda or Nepra have no jurisdiction to modify the "intent and prescription of determination of NHP" as provided for in the Constitution. أكثر... ??????? ??????: Rs277b fleeced from power consumers on two hydropower stations || ??????: ahlam1399 || ??????: اسم منتداك
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