Talks with World Bank

Pakistan to seek time for raise in power tariff

Bank’s review mission will also negotiate terms of the new SAC-III

Govt to brief mission on latest position of people displaced by GBHP

By Khalid Mustafa

ISLAMABAD: The World Bank’s mission to negotiate the Structural Adjustment Credit-III (SAC-III) is expected to ask the government today (Tuesday) why it has not implemented the National Electric Power Regulatory Authority’s (NEPRA) decision to raise
power tariffs.

The World Bank mission, headed by Mr John Penzar, arrived on Sunday to negotiate the terms of the new SAC-III with the Pakistan government. The mission will also hold discussions with officials from various ministries and will review the targets given to
the ministries.

Sources in the Ministry of Finance told Daily Times the review mission would meet with Finance Minister Shaukat Aziz today to discuss why the government has not implemented NEPRA’s decision to raise power tariffs by between 17 to 58 paisas in nine consumer categories. They added that Finance Secretary Naveed Ahsan, Secretary General Finance Moeen Afzal, Ministry of Water and Power Secretary Hamid Mirza and top officials from the Ministry of Food and Agriculture would also attend the meeting.

The Pakistan government had assured the World Bank, under the Structural Adjustment Credit-II (SAC-II), that it would raise power tariffs by 16.2 percent in order to make the Water And Power Development Authority (WAPDA) financially viable for corporatisation. They said that in line with this undertaking, NEPRA had recently announced a hike in power tariffs.

However, after subsequently gauging reactions from politicians, cabinet members and the general public, President Pervez Musharraf ordered WAPDA to immediately halt implementation of the decision. He also asked the power utility company to file a request with NEPRA to review the decision, with a 50 percent slash in the recent hike in power tariffs, especially for domestic consumers.

Sources said the government would probably seek some time to fulfil the bank’s demand that power tariffs be raised, as this was an essential prerequisite for disbursement of the $500 million loan Pakistan has already been granted by the bank under the SAC-II. They added that it would be difficult to obtain new loans from the bank if power tariffs were not raised. In addition to power tariffs, the World Bank mission will also discuss the latest position of the people affected by the Ghazi Barotha Hydropower Project (GBHP), the National Accountability Bureau’s (NAB) cases on the GBHP, the drought emergency relief assistance
and the National Drainage Programme (NDP).

Sources said the government has decided to give cash compensation to the people displaced by the GBHP. “We had earlier offered them lands in Sindh, but they refused to accept these and demanded lands in the NWFP and Punjab,” they said, adding, “Since both the NWFP and Punjab refused to compensate the displaced people with lands, the federal government has decided to give them
cash compensation.”

Sources also said the government would try to convince the World Bank mission to fund the National Drainage Programme. The bank had decided to close future funding to the NDP in its portfolio and lending programme review meeting held in Islamabad in August last year. In the meeting, the bank had declared that the NDP was problematic and slow moving and had put it on the ‘watch list’ and ‘corporate risk’ category. Since then, the government has decided to re-initiate the NDP at a restructured cost of $429.12 million (Rs 25.05 billion) with various modifications, and is expected to ask the bank to help re-start the project.

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