ISLAMABAD: The federal government finds itself on a tightrope as the IMF has stepped up pressure on the top mandarins of the finance ministry to align Wapda with the State Owned Enterprises Act 2023 by changing its existing structure with the Board of Directors (BoD) and its Chairman. Under this structure, the BoD will appoint a Chief Executive Officer CEO to run the show.
“The government’s financial managers have given an undertaking to the Fund under the $7bn loan programme that the Wapda Act will be changed and aligned as per the SOE Act. It is a structural benchmark. So, the Ministry of Water and Resources has been assigned to ‘draft’ changes in the Wapda Act,” well-placed senior officials told this correspondent.
“However, some powerful circles have opposed this move, arguing that Wapda is, first of all, not a commercial entity, but a strategic organization, which erects the water-related structures, which includes dams, hydropower projects, improving irrigation system and maintaining the flood control structure and barrages.
“Water is the life of any country, and Wapda deals with Tarbela and Mangla dams and is in the process of erecting Diamer-Bhasha, and Munda dams. The reservoirs have been built with a primary purpose to cater to the irrigation requirements of the four federating units. Wapda in return for these services does not make business.”
However, hydro generation is a byproduct, which is not the main purpose and Wapda’s top priority. When the Indus River System Authority (IRSA) asks the Wapda to release water on demand of the provinces and the water is released, it is only then the electricity is generated. This is why the electricity generation is called a byproduct of the dams.
In this way, “Wapda through generation of electricity earns revenue to meet its operational cost and initiate irrigation projects. Furthermore, Wapda raises funding through bonds based on its financial health and assets for future projects. More importantly, the central government also allocates funds through annual PSDP allocations.
“Wapda, therefore, is not a loss-making entity, rather it’s a strategic entity. The SOE Act 2023 was made to turn around the loss-making organisations. However, the Wapda by nature is not a profit-making body and should not be treated under the SOE ACT,” the circles maintained.
These circles are of the view that financial managers of the sitting regime should not have given such an undertaking to the IMF. The defence-related entities, strategic projects and nuclear power plants are exempted from the SOE Act. This entity builds and maintains water reservoirs and is the first line of defence against the water war initiated by India. “Therefore, Wapda should be treated as a defence and strategic organisation and must continue to operate under the existing Wapda Act.”
India’s suspension of the Indus Waters Treaty has sparked concerns in Pakistan about potential water manipulation, which could severely impact crop sowing and food security. In response, Pakistan aims to accelerate the completion of its ongoing dam projects to mitigate the effects of potential water manipulation by India. The situation is critical, with Pakistan’s leadership warning that any interference with water flows will be considered an act of war.
Given the situation, the finance ministry officials, according to top sources, are required to convince the IMF that bringing Wapda under the SOE Act would be detrimental, as it would lead to independent directors dominating the board and potentially altering Wapda’s management structure and focus. Wapda’s focus on hydroelectric power generation may lead to prioritising power production over irrigation water release. This could result in water being wasted and agricultural needs being compromised. Dams are built primarily for irrigation, but profit goals may override this purpose.
