20000309

Hubco proposes

framework for

dispute solution

KARACHI: Hub Power Company on Wednesday confirmed its having submitted to the federal finance minister a proposed framework for resolving the Hubco-Wapda dispute.

The company said the proposal was submitted at the finance minister's request, and that the proposed framework took into consideration Wapda's financial difficulties.

The company did not disclose any details of the proposed framework other than the fact that Hubco had offered to bring down its internal rate of return from the present 18 percent to 15 percent.

"We have submitted a very significant proposal to the minister, one that provides many benefits for Wapda," Hubco said, adding. "We are hopeful that it will provide a constructive framework for negotiations."

"It is unfortunate that people keep making false charges against Hubco, particularly since we have repeatedly expressed our willingness to negotiate the tariff issues," the spokesman said. "We have been forced to seek arbitration under the power purchase agreement so that these issues can be settled at a forum where facts can become known."

A Hubco spokesman said that the company was victim of a smear campaign and studies undertaken by authoritative institutions proved that Hubco's power tariff was comparable to that of other independent power producers in the region and lower than some.

"Hubco produces the lowest-cost power available in Pakistan," company spokesman said, adding "We operate the most modern, efficient power plant in the country, and our tariff is quite fair".

The spokesman noted that the World Bank had said that Hubco's tariff "is most likely to be lower than the real cost of Wapda expanding its generating capacity. Most of Wapda's projects in the past have experienced serious cost over-runs, delays and less than satisfactory operational efficiencies".

"The real problem is that Wapda does not take full advantage of the Hubco plant," the spokesman said.

"Wapda is the only customer, so if they do not take all the power we produce, or they restrict our level of generation, Wapda itself drives up the per-unit cost because the fixed costs of operation are spread over fewer units of power. If Wapda takes more power from Hubco the average cost per units drops accordingly".

The spokesman stressed that all agreements and amendments to agreements were negotiated in an open process with full participation of Wapda and the government officials.ÑFortuna