PM on hydel profit

PM on hydel profit

In a media talk after the inauguration of trade facilitation terminal at Torkham, the Prime Minister Imran Khan said that prevailing economic condition do not allow the payment of hydel profit to Khyber Pukhtunkhwa in accordance with A.G.N Qazi formula as it will necessitate further power tariff hike. The province has never received the full amount of hydel profit and the accumulated arrears have swelled to Rs.150 billion plus. However, the release of decreased amounts of payments of hydel profit by the federal government every year has been a source of projected revenue to meet its expenditure obligations on account of development and current expenditures. The province generates revenue of Rs. 60 to 70 billion from taxes against the expenditure of Rs.347 billion. The government and opposition have always been unanimous on the issue of hydel profit payment to the province compatible with the already decided formula.

In sharp contrast to the leadership of other political parties, Prime Minister Imran Khan does not make false promises and tall claims about the health of national economy. But the external and internal factors have always forced power tariff increase in the past and will do so in futures as well. The previous governments of two mainstream political parties did not formulate and implement viable energy policy of electricity generation from renewable sources like hydel, wind and solar. Shady deals were made for expensive thermal power generation and its purchase in the second tenure of PPP government. The clause of 40 idle plant capacity charges to IPPs plus indexation of their electricity tariff with currency depreciation against the US dollar had accelerated power sectors crisis.

The last PML-N government made similar non-transparent agreements with Chinese Companies for thermal and hydel power generation. Capital Expenditure was about 40 percent higher the international cost for such projects. The per unit tariff of 8.4 cents for coal power is highly inflated as in other countries tariff for coal power is 5cents or below.

The hydropower projects which are being completed by Chinese under CPEC will alarmingly raise the power tariff in future. A comparative data of different projects shows that per unit cost vary widely. The cost of Karrot project is 2.03 times more than the reference cost of Dasu hydro power project which is being financed by the World Bank. Likewise, Kohala is 3.31 times, Azad Pattan 3.97 times, Suki Kinari 2.38 times and Mahal 2.50times. Massive line losses, electricity theft and default of electricity bills by influential defaulters and government departments add to the volume of massive circular debt for which power tariff is frequently jacked up.

The recent drones attack on Aramco oil complex in Saudi Arabia has caused 3 million barrel reduction in the production of crude oil and rise in its price in the international market. It will certainly increase the production cost of electricity from diesel and furnace oil fired thermal power plants. The increase in electricity tariff will be inevitable then whether hydel profit is paid or not to Khyber Pukhtunkhwa.

Power sector urgently needs drastic reforms aimed at lowering electricity tariff. The focus should shift on more competitive projects like hydel, solar and wind. There is dire need of additional power generation of 10000 megawatt from renewable sources as the induction of low cost electricity in the transmission and distribution system can bring the average tariff down to affordable limit for all categories of consumers. The transmission system also needs up-gradation to reduce line losses. Last but not the least strict action has to be taken to eradicate the culture of bill default and power theft, otherwise the necessary evil of hiking power tariff will refuse to go away.

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