20000325

Hubco 'ready

to negotiate

tariff issue

with Wapda'

KARACHI: Hub Power Company Limited (Hubco) was ready to negotiate power tariff reduction with Water and Power Development Authority (Wapda) and it was time for Wapda to act in a reasonable and responsible manner.

"It is time for Wapda to act in the best interests of the people of Pakistan and bring this dispute to an equitable resolution, which Hubco has offered to do numerous times, a spokesman said here on Friday.

He said the most unfortunate result of the Hubco-Wapda dispute was the major damage it has caused to foreign investment in Pakistan. "By unilaterally disavowing a valid commercial contract with an international group of investors, and trying to hide its actions behind false claims of corruption, Wapda has almost single-handedly caused international investment in Pakistan to come to a halt, the spokesman added.

He said another audit of the construction of the Hubco plant outside Karachi will confirm that the plant was the most efficient and economical source of electric power in Pakistan. "While we believe another audit is unnecessary, as there have already been several performed, we are confident that if such an audit is conducted by an independent third-party organisation with international credentials, it will prove that all financial arrangements related to the plant are proper and were agreed upon with the full knowledge and participation of the government of Pakistan and the Wapda," the spokesman added.

He noted that Wapda should be in possession of all documents relating to the plant's construction and financial arrangements, and that Wapda's present claim that it did not know of such financial arrangements was false. "The government or Wapda was a party to every important negotiation so it is incorrect to now say that such negotiations were unilateral or unfair. Clearly, Hubco could not have changed its tariff rate without government permission, so to claim that we changed the rate unilaterally is obviously untrue," he added.

The Hubco spokesman said that the World Bank and two independent analyses of the Hubco tariff issue have confirmed that the tariff rate was reasonable and similar to the rates of other independent power plants in the region. Both the government and Wapda have prepared several extensive studies on the use of independent power producer in Pakistan and that part of the government's plan for using such plants was to grant tax-free status so that the cost of taxes would not be passed on the Pakistani consumers.

The spokesman said Hubco plant produces the lowest-cost power available in Pakistan. If Wapda would take all the power the plant can produces, the electricity rates for the people of Pakistan could be lower. By providing conflicting stories and mountains of confusing details, Wapda is trying to trick the Pakistani people into believing Hubco is the problem, but it is the inefficiencies of Wapda that are denying the people of Pakistan the economic benefits of that low-cost power".

Opposing Wapda's attempts to compare the Hubco plant "unfavourably" with the Muzaffargarh plant the spokesman said an accurate comparison of those plants, as found in the Pakistan Energy Year Book, will so that fuel cost for the Muzaffargarh plant are 11 percent higher than the Hubco plant, that the Muzaffargarh plant's load factor was 53 percent lower than Hubco and its auxiliary consumption was 23 percent higher than the Hubco facility.

"Wapda is trying to say that the Muzaffargarh plant is better and more economical than Hubco but the truth is that it does not compare favourably with the Hubco plant Ñ our plant is more efficient and more economical in the long run," the spokesman said.ÑPPI