20000309

New Hubco tariff

proposals to cut

return on shares

RECORDER REPORT

KARACHI: The Hub Power Company (Hubco) on Wednesday confirmed that it has submitted a fresh proposal for tariff restructuring to the finance minister which may significantly lower rate of return for the shareholders.

While clarifying several misconceptions with regard to the company's affair, a spokesman of Hubco said there are no guarantees to the shareholders with regard to returns as against the widely-held view that Hubco's investors are guaranteed a certain rate of return. "This is a straight-forward commercial business deal, and there are no guarantees for anyone", he said.

Claiming that it is the victim of a smear campaign, Hubco denied charges that its cost of electricity is unfairly high. Hubco produces the lowest cost power available in Pakistan, the spokesman said. "We operate the most modern, efficient power plant in the country and our tariff is quite fair."

He also pointed out that real problem was that Wapda did not take full advantage of the Hubco plant. "Wapda is our 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 our fixed costs of operation are spread over fewer units of power. If Wapda takes more power from us, the average cost per unit drops accordingly," he said.