20000122

Balance sheet next week

Wapda shows Rs 10 bn profit in 1998-99

TAHIR DHINDSA

ISLAMABAD: As part of its strategy to overcome financial problems and move towards corporation, Wapda has shown a net profit of Rs 10 billion during the financial year 1998-99, Wapda sources told Business Recorder on Friday.

Wapda will make the provisional balance sheet public some time next week at its headquarter in Lahore. The profit has been calculated after the payment of all debts, making all investment plans financially current and deducting all administrative expenditures, which were about Rs 110 billion during the year, according to the first provisional estimates.

"The progress could be made possible by adopting strict standards in billing and transmission and distribution network," sources said.

With its own house in order, Wapda has requested the federal government to convert Rs 36.5 billion of its outstandings into equity so that the Authority could be bailed out of the morass. The federal government on Thursday, decided to convert the amount into equity. The notification in this regard was issued on Friday.

Also, the federal government has raised the credit ceiling of Wapda by another Rs 7 billion, so it is negotiating with banks for the facility.

This amount was the outstanding debt of financial years 1996-97 and 1997-98. During this period a major portion of Wapda's income was dedicated to the payment to the independent power producers (IPPs). Wapda stopped almost all payments against its running commitments, including development projects and gas distribution companies and the IPPs.

Sources said that now the local currency components are available for the running of development projects like Ghazi Barotha. They said the required Rs 5 billion for the current financial year for the project has been made available for spending. However, the World Bank had been insisting that the Wapda should commit total expenditure in rupee component over the construction period of the project, which is about Rs 15 billion.

"Only because of the improved balance sheet, Wapda could withstand the impact of fuel price hike, which was additional about Rs 2 billion for the running year."

The one-time liquidity injection which the government has decided to give to Wapda is a part of overall restructuring plan prepared with active involvement of the World Bank. The steps recommended in the plan are aimed at making Wapda's existence financially viable and operations and investment plans sustainable over a period of time without any support from the federal government.

To remove the final irritant in the corporatisation of this public sector utility company, Wapda has imposed general sales tax (GST) on electricity from January 1, 2000, which will be reflected in bills for February. For domestic consumers, GST has been adjusted against the additional surcharge and for commercial and agriculture users it will be imposed above the slab of 500 units.