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Centre to pay Punjab Rs82b in net hydel profit

Centre to pay Punjab Rs82b in net hydel profit

ISLAMABAD: The centre on Monday agreed to pay Rs82 billion to Punjab in arrears of net hydel profit (NHP) of the Ghazi Barotha hydroelectric power project amid claims that the provincial government had backed off from its earlier undertaking that it would not demand hydel profit from the project.

The federal government has agreed to settle the NHP relating to the Ghazi Barotha hydel power project in line with principles of a similar settlement reached earlier this year with Khyber-Pakhtunkhwa government, according to an announcement of the Ministry of Finance.

K-P agrees to pay Rs18b from net hydel profit

The centre and Punjab reached the agreement during a meeting, attended by the federal minister for water and power, Punjab chief minister, Punjab finance minister, federal secretary water and power and Finance Minister Ishaq Dar.

The Rs82-billion arrears of NHP will cover the period 2005 to 2016 in four installments, said the finance ministry. Of this, Rs38 billion will be settled through issuance of promissory notes – signed documents containing a written promise to pay the agreed amount at later stages.

The promissory notes would be issued by December 31, 2016 by the Water and Power Development Authority (Wapda) while the remaining amount would be paid over the next three fiscal years, said the finance ministry.

There are about a dozen hydroelectric power projects in Punjab but the 1,450-megawatt Ghazi Barotha project will become the main source of NHP for the provincial government.

According to recent media reports, Wapda had refused to borrow Rs38.12 billion to pay the first installment of NHP to Punjab in the current financial year, saying it has already exposed itself to banks through massive borrowing.

The Rs82-billion amount would be recovered from electricity consumers through tariffs.

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Wapda after soliciting the Council of Common Interests (CCI) approval would file a petition with the National Electric Power Regulatory Authority (Nepra) to seek tariff determination for the supply of electricity from the Ghazi Barotha plant incorporating the terms of settlement, said the finance ministry.

“It is a controversial decision, as Punjab had given up its right on NHP from the Ghazi Barotha hydroelectric power project at the time of project construction,” said Sardar Tariq, former member water of Wapda. He had overseen construction of the project which was completed in 2002.

He said there was also an issue over the distribution of NHP from the project, as most of its infrastructure was located in K-P while the power station was in Punjab.

However, the Constitution gives the right of NHP to a province where the power station is located.

“Our stand is unambiguous. Punjab will only give up its right on NHP, if other provinces also do the same,” said Dr Ayesha Ghaus Pasha, Finance Minister of Punjab.

She said NHP was the right of the province that it would not give up and denied that the province had surrendered its right.

An official of the finance ministry said Punjab reestablished its claim over NHP from the Ghazi Barotha plant during negotiations for the seventh National Finance Commission award in 2010.

It was second such settlement between the centre and a federating unit, as earlier the centre and K-P had reached a similar arrangement for payment of Rs70 billion in outstanding NHP.

Wapda sought an increase in tariff to facilitate the payment to K-P on account of NHP settlement.

The centre and K-P had also agreed to uncap NHP as determined by Nepra on the request of the provincial government, resulting in increase in NHP from just Rs6 billion to Rs19 billion annually.

Courtesy : Express Tribune

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