The Karachi Electric Supply Company Limited (KESC) is deliberately avoiding clearing outstanding dues of the independent power projects (IPPs), roughly about Rs 7 billion, to create artificial shortage of power in the city.
KESC's reply to National Electric Power Regulatory Authority (Nepra) on the alleged purchase of power through rental power projects (RPPs), instead of its own thermal power plants, "thereby declaring the practice against the prudency of business", has been described as "total lie" by Transparency International Pakistan (TIP). Nepra had sought KESC's reply on TIP's complaint on the subject.
Syed Adil Gilani, Chairman of TIP, in a letter sent to Khalid Saeed, Chairman of Nepra, on October 17 said: though the copies of agreement of KESC 2005 and amended agreement of 2009 have not been supplied to TIP, which is a gross violation of Public Procurement Rules 2004, Rule No 47, it is comfortable with the current actions taken by Securities & Exchange Commission of Pakistan (SECP) and Nepra. Heavy fine has reportedly been imposed by Nepra which is the regulatory authority on KESC for its failure in maintaining regular power supply and not utilising power from it own plants and those of IPPs.
The TIP chairman said that Gul Ahmed Energy Ltd has confirmed to him that KESC has not paid their outstanding dues of over Rs 3 billion which resulted in total stoppage of power in last three months on two occasions--once for five days and on another occasion for 15 days. KESC is only paying in instalments of 4-5 days for fuel purchase to the two IPPs, ie Gul Ahmed Energy Ltd and Tapal Energy. The total outstanding dues of Rs 7 billion of the two IPPs have not been paid by the KESC, he said.
He asserted that in accordance with 2005 agreement, $400 million were to be invested in KESC for repairs, maintenance and operating expenses. When Abraj, the present owners, bought the shares and took over the management, they knew the agreement conditions, and were obliged to provide the funds.
Adil says that KESC is a wilful defaulter. He has also mentioned in his letter to Nepra that KESC has been indulging in hiring "sons and daughters of ruling coalition legislators, at very high salaries, and using them as lobbyists". These allegations also need to be verified by SECP and Nepra.
KESC's denial that it is not seeking any rental power is contrary to the reports available with TIP. The RPP service contract between Walters Power International and Lakhra Power Generating Company Ltd at Korangi, Karachi, of December 24, 2008, for five years, confirms that KESC is the user of this 205 MW RPP. "It has been reported to TIP that KESC management is deliberately creating energy shortage by not paying the dues of IPPs and other energy suppliers to justify the setting up of RPP as urgent need, which will be at Rs 23 per unit."
TIP has requested Nepra and SECP to take up these issues with KESC. "Kindly take lesson from Competition Commission of Pakistan (CCP) which has imposed a fine of Rs 6 billion on cement cartel. Nepra and SECP need to take serious measures so that KESC performs its obligations towards users and strictly in accordance with the agreement terms of 2005, and avoids unethical practices as has been alleged by complainants".
In response to the letter written by TIP Chairman, SECP Chairman Salman Ali Shaikh, on KESC affairs, had assured TIP that the matter "has been taken up with the KESC by calling relevant information and comments/explanation to further probe the alleged irregularities". He was further assured that "the Commission is continuing its efforts to safeguard the interests of the shareholders", and thanked him "for bringing various issues to the notice of the Commission".
The KESC, in its reply sent to Nepra on October 5, had denied that it had not made payments to Gul Ahmed Energy Ltd as a result of which the IPP had stopped supply. "Gul Ahmed Energy Ltd continues to supply KESC with up to 125 MW of power, despite outstanding payment, which result from non-payment by other entities." It also described as "factually incorrect" the allegation that KESC is seeking rental power projects which will be costlier than power supplied by IPPs.
KESC is not seeking any additional rental power. KESC has 50 MW of rental power in place at the moment, which is provided at a highly competitive price, and is in fact cheaper than the current IPPs. Truth is sour. To what extent KESC was irked by the complaint lodged by TIP with the SECP and Nepra, could be judged from the last para of KESC's reply to Nepra.
It requested: "to treat any further correspondence received from Transparency International Pakistan as frivolous and without merit. Responding to such junk mail only confers a sense of legitimacy and self-importance upon individuals and entities of no substance".
Comments
Comments are closed.