KARACHI: In a prompt response to Federation of Pakistan Chambers of Commerce and Industry’s (FPCCI's) “appeal” to the Prime Minister Imran Khan, K-Electric on Wednesday said the facts and figures highlighted by the apex trade body on KE performance are 'unfounded'.
On May 25, the President FPCCI in a letter to the PM had sought his immediate intervention to help postpone the proposed sale of KE shares by its current owners.
Chief Executive Officer K-Electric Syed Moonis Abdullah Alvi in a letter to the President Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Nasser Hyatt Maggo said: “Several of the statements made [in the appeal] are unfounded as the facts and figures proves otherwise. I am surprised to see that the associations who participated in the ad did not feel comfortable to raise these concerns directly with us. This one sided appeal raises a question regarding the intent as most of those issues mentioned do not directly impact the consumer."
Maggo suggested, among other things, the unbundling of KE into a separate Distribution Company (DISCO) and an Independent Power Producer (IPP) company.
KE CEO said the company operates in a highly regulated environment, and it has always worked for the best interests of the consumers, whether it be industrial, commercial or residential.
“As a company we maintain transparency over our investment and expansion plans, and we have shared them numerous times with Karachi's industrial groups over the course of the last few years. In fact, we have come to rely on your guidance and insights to address bottlenecks in our systems for the genuine benefit of all our consumers as well, which has driven improvement in Pakistan's standing in the World Bank's Ease of Doing Business Index. Our financial records, our challenges, and our earnest efforts to improve the city we live in are all part of the public record.
“It is disheartening to see KE’s valuable stakeholders question the efforts that the company continues to make in such a negative manner, when the forums for dialogue are several and always available.”
He said these channels can be used for a dialogue with us before any stance is taken. The two-way communication will keep us aligned on a joint mission to drive progress for the city.
He also requested the industrial representatives to use their influence to support the utility’s efforts towards the overall vision of elevating Karachi’s profile.
Alvi has also invited FPCCI president to table any remaining challenges that he might be encountering and resolve them on a mutually agreed timeline.
Meanwhile, a KE press release stated the following:
“Recognising Karachi’s industries as the backbone of the nation’s economy, KE reiterated its commitment to the prosperity of the city and assured its customers that it is working untiringly towards the vision of a thriving metropolis. This commitment is underpinned by the investment of over PKR 375 billion since the company’s privatization which continues even today. The utility expressed its concerns over the recent exaggerated statements made by certain industrial groups in an appeal to the Honorable Prime Minister, which appeared to portray a contrary image based on incomplete or inaccurate information.
“Contrary to the claims of discrimination, customers across Karachi and its adjoining areas including Dhabeji and Hub, are billed according to tariff notified by the Ministry of Energy which is uniform across the country. This highly regulated environment does not allow any unilateral changes to the category-wise tariff rates by any individual distribution company.
“While state-owned Distribution companies registered a collective increase of 1% in their Transmission and Distribution (T&D) Losses, K-Electric has successfully reduced its T&D losses from 35.9% in 2009 to 16.9% (as of April 2021), reflects that KE is well on track to meet its T&D loss target of 16.8% for FY21, and the regulator maintains a close watch on the progress, holding KE accountable. This milestone progress has only been possible due to KE’s investment across its transmission and distribution value chain that has almost doubled the number of PMTs, added 19 grids, and extensively enhanced the transmission and distribution capacity of the system as well. It is worth mentioning that more than 75% of Karachi today also stands load-shed free, which all of Karachi used to suffer with at the time of privatization.
“Another bizarre claim made without any due consideration posited that KE is utilizing inefficient power plants, whereas the company has added more than 1057 MW to its generation fleet through 4 generation plants having efficiency levels of over 40%. Above all, KE’s flagship US$650 million 900MW RLNG based BQPS-III power plant having efficiency of almost 60% is in final stage of commissioning whose efficiency is comparable with state-of-the-art power plants at regional level. Even BQPS-I, the oldest plant in KE’s fleet, has a higher efficiency than comparable units of other Generation Companies in Pakistan.
“The utility also dismissed claims that KE has been receiving “100s of billions of rupees” in subsidies from taxpayers’ funds, when KE has no control in the entire mechanism at all. Also, since privatization KE has not received any operational subsidy form the Government of Pakistan. KE passes 100% of the benefit of the Tariff Differential Subsidy to customers in advance and enters into the process of seeking reimbursements with the Government, which entails a lengthy process and creates additional burden on the company as it has to borrow from financial institutions to finance its working capital requirements. Time and time again, the company has highlighted the growing strain on its financial sustainability, which remains to be resolved.
“KE has been working closely with the 7 industrial associations of Karachi and all associated chambers that represent Karachi’s business leadership, establishing a consultative process to incorporate their insights and jointly drive progress in the city. KE’s financial records, challenges, and earnest and eager efforts to elevate Karachi’s profile are part of public record. It is disheartening to see these undermined by statements issued when the forums for dialogue are several and always available and KE requests all stakeholders to use these forums constructively and come together for a thriving and prosperous Karachi.”
Copyright Business Recorder, 2021
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