Tackling Karachi's power crunch

Federal Minister for Water and Power Raja Pervaiz Ashraf has taken a serious view of frequent load-shedding in Karachi, and said that the duration of daily power outages in the city, where electricity deficit ranges from 250 to 270 megawatts, should not be more than two to three hours. Talking to newsmen, he has insinuated that there may be more to it than meets the eye.
He has promised that he, along with some experts, will remain in Karachi from the next week to monitor the power situation, including power supply, consumption and generation from the KESC plants, and will initiate corrective measures. The minister was quite categorical that there would be no load-shedding after December 2009, as the government has fashioned a comprehensive power generation strategy to meet the country's requirements.
The government has meanwhile finalised a deal with a Korean company to generate 1,000-megawatt power from its coal-fired generation plant, to be installed at Thar. The country's first ever wind power project was inaugurated last week at Jhimpir, with an initial generation capacity of only 6 megawatt.
The pioneering wind project has been described as the first step towards enhanced wind power generation in the country. The minister has also commended the establishment of Bio-diesel Pilot Nursery project as a part of the government's wider strategy to develop green and economical indigenous energy resources. He has spoken of trial production by PSO of bio-diesel through use of Jatropha oil that meets the standard specifications of diesel.
In fact, all the power projects the minister has mentioned are essentially experimental in nature, and therefore not suited to meet an emergency situation requiring emergency response, particularly at a time when the rising energy deficit has hit the economy really hard and triggered a recession-like downslide.
However, as the minister has conjectured, these might actually be deliberately created generation and supply problems, though continued dithering by KESC's new owners over upgrading power generation and distribution system is mainly to blame for the crisis in the country's industrial heartland.
Unlike what the minister has said, power deficit in Karachi is said to range between 350 and 400 megawatts, and not 250-270 megawatts, which has necessitated prolonged spells of power outages. This has not only hit industrial productivity; it has also generated social unrest and resentment.
As we have maintained in this space earlier, there are essentially three major causes of Karachi's persistent power shortfall: a serious lack of proper maintenance of KESC's generation units, the deterioration of transmission and distribution network, and the rising "system losses" that are said to range from 40 to 48 percent.
Above all, there is the failure of KESC's new owners to fulfil their contractual obligations under the Implementation Agreement to make an investment of 500 million dollars in the utility by 2008, to bring about its financial and operational turnaround.
This is probably the biggest handicap the KESC is saddled with, and there seems to be no easy and prompt solution to the problem in sight, because the new KESC owners are said to be in no hurry to fulfil their contractual obligations.
Secondly, the government also seems to be not particularly keen to force KESC management to fulfil its contractual obligations, though even if the utility agrees to do so it will not make an immediate impact on the prevailing power crisis, which in fact is the need of the hour. Meanwhile, Wapda's power supply to KESC is said also to have shrunk, under impact of the countrywide power deficit.
Thirdly, another serious handicap Karachi is faced with is that its share in Wapda's inexpensive hydropower remains almost non-existent, which has not only made the cost of production in the megacity prohibitively expensive, it has also eroded competitiveness of our exports.
Incidentally, KESC has been running almost perpetually in loss: it sustained a loss of Rs 12.787 billion in 1999-2000, Rs 16.201 billion in 2000-01 and Rs 17.741 billion in 2002, a major chunk of which was due to the high interest cost, incurred on borrowings.
Although the financial health of the utility has shown some improvement since its controversial privatisation, the new owners of the utility have made no major investment in the utility to improve its operational health. Viewed in the overall perspective, endless foot-dragging in water and power sector has at last brought the country's economy to its knees.
While individuals are believed to have capitalised on the crisis and made millions, the national economy has been sent into a dangerous tailspin that seems hard to stem. As the federal water and power minister has said, he would stay in Karachi along with some experts to monitor KESC's operations from the next week, he can best serve the cause of Pakistan's industrial heartland by ensuring that power theft and other "system losses," are cut to the minimum.
The power crunch in Karachi can be eased by ensuring a drastic reduction in systemic losses. This seems to be the only way to ease the power supply position in the megapolis in the immediate context. Secondly, the free fall can still be averted if fast track, short-term projects are given preference over mega projects, because these can produce tangible results in a much shorter time span.
Thirdly, there is an urgent need to bring about greater financial discipline in KESC, which may induce KESC owners to fulfil their contractual obligation. And lastly, there is a need for the KESC management to root out malpractice of all types and invest the money thus saved in improvement of the system. The government should prioritise resolution of Karachi's power generation and distribution problems, in the larger interest of the national economy.