Federal government and K-Electric have reportedly failed to evolve a consensus on new Power Purchase Agreement (PPA) meant to ensure electricity supply from national grid despite expiry of PPA almost a year ago, well informed sources in NTDC told Business Recorder. NTDC, sources said, has been continuously supplying 650 MW of electricity to K-E from the national grid in spite of the expiry of the PPA from January 26, 2014 at a rate equal to power Distribution Companies (Discos) at the expense of Discos consumers. K-E has to pay Rs 37 billion to the NTDC.
The sources said a high-level meeting will be held on Tuesday (today) under the chairmanship of Secretary Water and Power, Younas Dagha, to finalise recommendations for the committee headed by the Minister for Water and Power Khawaja Asif. The sources further stated that NTDC had sent a draft PPA to the K-E management with the indication that supply of electricity to K-E will be reduced to 350 MW from current 650 MW as the NTDC has to meet all Discos' requirements. However, the K-E management is unwilling to accept any reduction in electricity supply from national grid owing to their load growth.
"K-Electric was of the point of view that 650 MW is required by them owing to their load growth. GoP is of the point of view that the fixed supply is not possible anymore. K-Electric should use their own generation and then look at separate scenarios for summer and winter demands," the sources added.
Federal Minister for Water and Power, Khawaja Asif who publicly stated that K-E will not be given 650 MW electricity is now silent on the issue after a meeting with the representative of Abraj Group. K-E is also interested in acquiring stakes in Faisalabad Electric Supply Company (Fesco).
Unconfirmed reports also suggest that the management of K-E and Karachi Water and Sewerage Board (KW&SB) have reconciled payables and receivables and the representatives of both entities will give their viewpoints in the meeting. Sindh Finance Minister, Murad Ali Shah told Business Recorder that Sindh government has reconciled the amount. Previously, the representative of Sindh government conveyed that on the basis of meter testing results and corrective measures taken by K-Electric to correct the billing on actual reading basis of 17 bulk connections, the K-Electric had been asked to adjust an amount of Rs 7.056 billion out of Electricity Duty(ED) collected, against the current billing from July 2014 to October-2015 of 17 connection's machines/ Industrial load only (excluding houses and residential colonies).
However K-E maintained that the payment mechanism is not acceptable to them as annual billing is around Rs 8.5 billion and KW&SB is not paying a penny. Currently the KW&SB owes Rs 42 billion of K-Electric accumulated since 2006-07. The Police Department and Health Institutions (strategic consumers) are also not paying their dues on time hiding under the strategic consumer umbrella. Such Strategic Consumers are increasing the liabilities and receivables of K-Electric. Both organisations still dispute the billing.
Sources in Petroleum Ministry told Business Recorder that K-E and Sui Southern Gas Company Limited (SSGCL) still have differences on the Gas Sale Agreement (GSA) as the latter wants the agreement on the following terms: (i) contractual quantity;(ii) take or pay and ;(iii) gas supply deposit.
In one of the previous meetings, SSGC had revealed that the Late Payment Surcharge (LPS) is charged on overdue balances as stated in clause V of payment agreement dated 30 June 2009 between SSGC and KE and recorded in books of accounts accordingly. Whenever the payment is received from KE, interest is first adjusted and the balance goes to principal outstanding.
KE accrued LPS in respect of SSGC overdue balances till 30 June 2010. Thereafter, it discontinued acknowledging LPS and started accruing on a net basis. KE non- accrual of LPS have been pursued by SSGC with SECP also. This resulted in a difference between SSGC and KE of LPS amounting to Rs 36.068 billion. KE is paying its current gas bill since 1st payment plan - March 2014 executed between SSGC and KE but no substantial payments have been received against past over dues. As the payment against arrears is linked to the current gas supply, it increases the amount of arrears on a monthly basis which soared to a staggering level of Rs 63.552 billion. K-Electric claimed that as it is not receiving any mark-up from its defaulters and government consumers, then why it is being persuaded to pay that. The issue of subsidy is also still disputed. Finance Ministry claimed that subsidy being claimed by the K-Electric is the highest within Discos. Accordingly, the administration should justify its subsidy claims.
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