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Hubco sees better outlook for tariff row

ISLAMABAD: Pakistan's Hub Power Co Ltd said it saw brighter prospects under the country's new military government for a settlement of its long-running tariff dispute with the state utility.

"I think I wouldn't be wrong in suggesting that the circumstances for a negotiated settlement are probably at their brightest," Khurshid Hussain, Hubco's chief executive officer, told Reuters late on Wednesday.

Hussain's optimism came despite the Water and Power Development Authority's (Wapda) recent statement that it had no interest in a negotiated settlement to the 30-month court tussle and preferred to continue fighting the case in court.

Hussain based his outlook on the attitude of the military government which took over last October after ousting former Prime Minister Nawaz Sharif in a coup.

"Firstly, the new administration has dissociated itself from the politics involved in this dispute...," he said.

"And secondly...the finance minister (Shaukat Aziz) has referred to this very principle that all parties must contribute to a financial solution.

"And I believe that the finance minister has identified not only the company, but also the government itself, the Wapda, the lenders and the World Bank," Hussain said.

LONG-RUNNING ROW

The World Bank, which has linked new lending to Pakistan to an amicable solution of the row, has an exposure of about $500 million in Hubco through guarantees to its lenders.

"It is the convergence of these two things that make me believe that the prospects of a settlement now are at their brightest," Hussain said.

Wapda accuses Hubco and 19 other independent power producers (IPPs) of overcharging for their electricity. It has negotiated new tariffs with 10 IPPs, but its row with Hubco, the largest private power producer in the country, remains unresolved.

The dispute, which started in 1997 under Sharif, strained relations with the International Monetary Fund, the World Bank and clouded the country's investment climate.

A formal hearing on the dispute began on Tuesday and is likely to last at least two more weeks.

Military ruler General Pervez Musharraf, soon after assuming power in October, said resolving the IPP row was a key priority of his regime to restore investor confidence.

But Wapda lawyers told the Supreme Court on Tuesday that the utility had no desire to continue negotiations and wanted to settle the matter in court. Hussain called that "disappointing".

Hussain said according to Hubco calculations, Wapda owed at least 13 billion rupees ($250 million) to Hubco in withheld payments for the electricity it sells to the state utility.

But he said Hubco has so far been able to service its debts.

"However, this will not always be the case. And there is a question mark hanging over the next debt repayment in July 2000. It will be around $50 million," Hussain said.-Reuters