Energy Sector Difficulties of Pakistan- Wapda, Finance Row
ISLAMABAD (June 05 2007): Finance Ministry asked the Prime Minister Secretariat and Water and Power Ministry to take action against Wapda for its casual behaviour in implementing the directives of Prime Minister Shaukat Aziz, official sources told Business Recorder here on Monday.
Tanwir Ali Agha, Secretary, Finance wrote a letter on May 19 to the Principle Secretary to the Prime Minister, Khalid Saeed, a copy of which was addressed to Secretary Water and Power, suggested suitable measures to deal with the prevailing situation in the power utility.
"You will appreciate that the Finance Ministry can not provide an allocation for subsidies without reassuring that amounts are fully justified. This is where the matter stands today. I suggest that Water and Power Ministry take necessary steps to remedy unsatisfactory state of affairs which is prolonging Wapda's financial crisis," sources quoted Agha as saying.
The letter further said that the Finance Ministry had been requesting the utility to prepare a 'Financial Improvement Plan' (FIP), for some months now, and the Ministry of Water and Power has been kept informed. Up till now, Finance Ministry has not received anything despite the fact that it is the last week of April 2007, he complained.
"I met with Wapda's s team and explained to them in considerable detail on what the elements of the FIP should be. They promised to present their Disco-wise FIP within a week," he continued. Prime Minister Aziz had also directed during the presentation on Wapda on April 24 that the financial plan be reviewed by Ministry of Water and Power, Finance, Wapda, but unfortunately this directive of the Prime Minister remains unimplemented despite Finance Ministry's best efforts at every level, Secretary Finance maintained.
Agha further said that Finance Ministry was alive to Wapda's financial needs and it had arranged bank borrowing of Rs 33.8 billion including Rs 18 billion government guaranteed loans.
Further, Finance Ministry was providing all-out support to Wapda to float Sukuks to the extent of Rs 8.0 billion, which could be extended to Rs 20-25 billion, as Director General /Additional Director General were involved at a very personal level and were spearheading these efforts, he explained. "Again we have had to push hard for co-operation but Governor, SBP is on board and fully supportive of this proposal," he said.
Agha was of the view that these extraordinary financial arrangements had been made by Finance Ministry so that Wapda service its liabilities, including debt servicing to the government. In addition to these special arrangements, of which Minister for Water Liaquat Jatoi and Prime Minister's Principal Secretary were fully aware, Rs 33 billion and between Rs 15 and 20 billion were in the pipeline over and above additional Rs 18 billion subsidy that Wapda had been seeking without an FIP.
"Wapda has its own receipts over Rs 22-23 billion a month and, in June, their collections are historically high. In addition, on March 31, the utility had bank deposits of Rs 45 billion. So, we really need to get a hand on what is happening to Wapda's finances," the worried Agha said in the letter.
While summing up, he said that Finance Ministry had ensured that Wapda should have adequate finances so that it could service its debt to the federal government of Rs 17.8 billion urgently. "Wapda must, without any further delay, prepare a Disco-wise FIP, showing how they will improve on line losses, recoveries, etc consistent with Nepra's benchmarks," he suggested.
If Wapda does not carryout these efficiency improvements, the requisite subsidy from the budget will be absolutely untenable as would be required tariff increase, he viewed. Sources said that Wapda did not submit FIP to the Finance Ministry; rather sent a letter saying that it could not prepare FIP until tariff review petitions of Discos were finalised.
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Supply from energy sources up 50.2 percent in 10 years
The energy supply during first nine months of the current fiscal year increased to 45.35 million TOE from 42.44 million TOE, or 6.8 percent, as compared to last year. According to the survey, the balance recoverable reserves of crude oil, as on January 1, 2007, were estimated at 317.82 million barrels.
The average crude oil production during July-March was 66,485 barrels as against 65,385 barrels per day during the corresponding period of last year, showing an increase of 1.68 percent.
Production of crude oil per day increased to 66,485 barrels during July-March 2006-07 from 65,385 barrels per day during the same period of last year, showing an increase of 1.7 percent.
The overall production of crude oil increased to 18.2 million barrels during July-March 2006-07 from 17.9 million barrels during the corresponding period of last year, showing an increase of 1.7 percent.
On average, the transport sector consumed 50.7 percent of petroleum products, followed by power sector (32.1 percent), industry (11.4 percent), household (2.2 percent), other government agencies (2.3 percent), and agriculture (1.3 percent) during last 10 years ie 1996-97 to 2005-06.
However, during July-March 2006-07, crude oil production declined by 2.21 percent from the Northern region and the production efficiency increased in Southern region by 4.81 percent as compared to the same period of last year.
It further said that Pakistan's economy has been growing at an average rate of over 7.6 percent per annum over last three years and the government was making efforts to sustain growth momentum, addressing the challenges of rising energy demand. These include import of piped natural gas from
The average production of natural gas per day stood at 3,876 million cubic feet during July-March 2006- 07, as compared to 3,825 million cubic feet over the same period of last year, showing an increase of 1.3 percent.
The overall production of gas increased to 1,062,124 million cubic feet during July-March 2006-07 as compared to 1,048,190 million cubic feet daily in the same period of last year, showing an increase of 1.3 percent.
On average, the power sector consumes 36.4 percent of gas, followed by fertiliser (21.6 percent), industrial sector (19.1 percent), household (17.8 percent), commercial sector (2.7 percent) and cement (1.1 percent) during the last 10 years ie 1996-97 to 2005-06.
Total installed capacity generation witnessed no change during July-March 2006-07, as it was 19,440 MW in first nine months of current financial year. Total installed capacity of Wapda stood at 11,363 mw during July-March 2006-07, of which hydel accounted for 56.9 percent or 6,463 mw thermal accounts for 43.1 percent or 4,900 MW.
During first three quarters of current fiscal year, 71,033 GWh electricity was generated as against 66,110 GWh produced in the same period of last year showing an increase of 7.4 per cent. The number of villages electrified increased to 113,605 by March 2007 from 103,231 up to 2005-06, showing an increase of 10 percent.
Presently, some 1414 CNG stations are operating in 85 cities and towns. By March 2007 about 1.35 million vehicles were converted to CNG as compared to one million vehicles during the same period last year, showing an increase of 35 percent. On average 29,167 vehicles are being converted to CNG every month. With these developments,
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