Lahore - Wapda, in its meeting presided over by chairman Zafar Mahmood here on Friday, showed concern that the authority had been facing tremendous difficulties in discharging its mandated role due to financial constraints.

It was observed in the meeting that Wapda at present has the mandate of development of water storage capacity and hydel power generation in the country. Despite abundant water resources, Pakistan could develop only 14% of storage capacity of surface water against a world average of 40%. Over the years, that too has eroded considerably due to phenomenon of sedimentation. The meeting noted that the country has a total hydropower potential of about 100,000 MW with an identified potential of 60,000 MW. Despite possessing this enormous potential for generation of low-cost electricity, Pakistan has, so far, been able to generate just 7000 MW of hydel electricity, which is merely a fraction of total identified potential. Financial difficulties are at the heart of non-development of hydel resources, it was observed.  It was further discussed that in the wake of signing of Indus Basin Treaty in 1960, the implementation of Indus Basin Replacement works including two mega dams namely Mangla and Tarbela, five barrages, eight inter-river canals, and one siphon was carried out by Wapda with assistance of World Bank as a lead agency.

After construction of Mangla and Tarbela dams and setting up of their power stations, the Ministry of Finance used to determine the end-consumer tariff, which retained enough built-in financial cushion, thereby enabling Wapda to build future projects.

With financial space so available to Wapda during those days, it was able to construct a number of projects including thermal power plants such as Jamshoro and Muzzafargarh etc. However, NEPRA, after its establishment, took over the role of tariff determination. Wapda is now being treated like other IPPs for tariff determination and the present mechanism for power tariff determination for Wapda hydel generation does not have any fiscal space for implementation of future projects.  As a result of difficulties in arrangement of funds, Wapda has failed to attain financial close for ongoing 969-MW Neelum-Jhelum, 106-MW Golen Gol and other Hydropower Projects etc. Due to narrowing down of fiscal space both locally as well as internationally, financial constraints are creating hurdles in the execution of other projects such as Diamer Basha Dam, Dasu and Bunji Hydropower Projects.  Wapda has been approaching capital markets to generate funds for construction of its projects by issuing Wapda Bonds and Sukuk Bonds. The meeting expressed its satisfaction that Wapda never defaulted on those bonds.

However, issuance of bonds has its own limitations as they are accompanied by sovereign guarantees, it was observed. It was discussed in the meeting that the value of assets owned by Wapda runs into billions of rupees. The meeting decided that Wapda assets need to be re-evaluated according to market rate to assess their present value.  It further decided to offer a part of the re-evaluated assets to the general public as shares on need basis. Wapda will pursue this possibility in the earnest and use its standing as a commercial sector entity to generate funds for its projects so that it could play its mandated role effectively for development of water and hydropower sectors in the country, it was decided.