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Government to charge Hubco Rs 802 million as 'first fill'

ISLAMABAD (January 14 2003) : The federal government has decided to charge Rs 802 million as ' first fill' charge from the Hub Power Company (Hubco), after receiving a 'bitter response' from Wapda, whose former chief had struck agreement with PSO and the power company, informed sources told Business Recorder here on Monday.

The issue of 'first fill' has been discussed at different forums, including the Economic Co-ordination Committee of the Cabinet (ECC), but Wapda did not accept any decision, saying that the agreement was signed by former Chairman in his own capacity.

A few months back, the ECC had directed the Ministry of Petroleum and Natural Resources to seek the opinion of Law Ministry on the issue which, according to sources, gave the verdict in favour of PSO.

The Law Ministry said that the agreement signed by the former chairman was a legal document, as Wapda Act did not prohibit the Chairman to sign pact with any company.

Sources said that on Wapda's persistent refusal to pay the amount to PSO, the government decided to charge Rs 802 million, along with late payment interest, in accordance with fuel supply agreement.

The government, while changing its earlier viewpoint, has said that the plant was set up on 'build and own' but in accordance with the revised agreement, power plant is based on “build, own and transfer”.

The revised agreement automatically shifted the 'first fill' liability from Wapda to Hubco, sources said.

While giving the background, sources said that PSO had signed a fuel supply agreement in August 1992, according to which it was obliged to supply 128,000 tonnes furnace oil at no charge as 'first fill' because Wapda gave commitment to reimburse the 'first fill' cost within 14 days, subject to receiving the invoice.

Wapda, while opposing PSO's viewpoint, said that 'first fill' liability was not contained in the project's agreement signed with Hubco and also the pact's letter was not incorporated in these agreements, sources added.

On Monday, Finance Ministry gave a detailed briefing to the Asian Development Bank's (ADB) review mission on privatisation of energy sector entities including PSO.

This correspondent made a phone call at the Hubco's Islamabad sub-office to seek the viewpoint of the company on the issue, but the attendant did not give contact number of any official.

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