KARACHI: K-Electric has shared a revised investment plan with the National Electric Power Regulatory Authority (Nepra), seeking regulatory approvals for “critical” investment of Rs140 billion which is in addition to the Rs299 billion already allowed by Nepra in its determination for the tariff control period of 2017-2023.
K-Electric’s Chief Executive Officer (CEO) Moonis Abdullah Alvi and Chief Marketing and Communication Officer Sadia Dada, while addressing a webinar on the subject of “Karachi’s future growth & enhanced KE investment plans” here, said that the power company has submitted its revised investment plan of a total of Rs440 billion with the regulator under 2017-2023 multi-year tariff (MYT) and sought the regulatory approval from the authority for the additional Rs140 billion investment.
They said that the revised investment plan was developed keeping in mind the dynamic and challenging environment we operate in. This plan aims to ensure Karachi’s power infrastructure can cater to the rapidly growing energy needs of the city and its adjoining areas, invest in network reliability and safety initiatives, while also driving fleet efficiency.
They said that the 900MW RLNG-based power plant at a cost of around $650 million is expected to be complete by the end of the calendar year 2021. This project is pivotal in meeting the city’s future demand growth.
KE’s request for revision in investment plan is owing to changes in macroeconomic factors as well as necessary scope revisions along with adjustments for working capital cost and PKR devaluation. It’s critical that requested investments are allowed and working capital requirements are considered to enable sustainable business operations and for provision for safe and reliable power supply.
KE's sustained investments making Karachi brighter
They said KE was allowed investment of Rs299 billion under Nepra determination 2017-2023, of which KE has invested around Rs255 billion by 2021, and also committed to invest the remaining Rs44 billion. They said the additional investments requested by KE are not only critical to sustain the improvements made in the past but also to ensure optimum service level.
While sharing the planned investment initiatives for the next couple of years, Sadia said six new grid stations are going to be installed, including 500KV level which is critical to manage demand and supply. KE plans to give more than 700mw new connections including 350mw for industry. It will add around 150 feeders and 2500 pole mounted transformers (PMTs).
Karachi’s power demand is expected to grow at a compound annual growth rate (CAGR) of 6.5 percent in the next five years, and timely completion of 900MW plant and grids for off-take of additional supply are critical.
Around Rs61 billion have been planned in the next two years to improve network safety and reliability.
They said that KE’s upcoming 900mw plant with 60 percent efficiency will be amongst top five efficient power plants in Pakistan.
KE is working with the federal government to build a 500kV and 220kV interconnections at key locations where KE’s network connects with the National Grid enabling the utility to offtake up to 2,050MW additional power from the National Grid which currently has an excess of generation capacity. With support from Ministry of Energy, NTDC and CPPA, and under guidance from NEPRA, KE managed to off-take additional power from National Grid which enabled KE to ensure smooth operations during summer of 2021.
Further, coupled with rapid installation of Aerial Bundled Cables that have resulted good results in curtailing theft, KE also plans to expand deployment of Automated Meter Readers on its network which improves visibility of the network and provides greater transparency. The combined impact of these potential investments in generation, transmission and distribution are expected to enable exemption of load-shedding from around 78% of the city today to more than 90% by 2023.
Since the tariff determined by NEPRA is a cost-plus tariff, KE’s investment plans are limited to those costs allowed as recoverable in the tariff.
Allowance of these plans have no direct impact on the customer end tariff. On the other hand, if excluded, this could impact KE’s ability to seek funding for these projects thereby adversely affecting the customers, particularly new connections as well as affect safety and reliability upgradation projects.
KE accused of violating power supply deal with govt
Alvi further said, “We understand that Karachi is a complex and unique city and its transformation requires an aggressive and targeted capital expenditure strategy. We envision that our plan will spur progress in the city and enable us to continue the upward momentum we have developed since privatization. Our investment plan has also been revisited and enhanced in line with the evolving global economy, which has been affected by several factors including a global pandemic.”
Aggressive investments of over USD3.8 billion since privatization have enabled a drastic reduction in transmission and distribution losses, making KE the most improved distribution company in the country. Exempting industries from load-shedding since 2010 has directly contributed to Pakistan’s GDP growth while also increasing employment opportunities.
The percentage of the city exempt from load-shedding has also risen to almost 78% on the back of additions in KE’s generation capacity, doubling of KE’s transmission and distribution network and significant reduction in losses.
Amir Ghaziani , chief financial officer (CFO) of KE, was also present on this occasion.
Copyright Business Recorder, 2021
Comments
Comments are closed.