Karachi's industrial production has suffered an aggregate loss of Rs 2.5 billion in just two days (Sunday and Monday) of power supply failure in its four premier industrial estates, ie SITE, Korangi, Federal B Area, and Landhi due to torrential rains in the city. This shows the pathetic state of the city's power transmission infrastructure, particularly in its industrial areas.
According to a Recorder Report, quoting SITE chairman, 50 percent of over 3,000 industrial units in SITE have roughly lost Rs 1 billion in reduced production, with the government too taking a hit of Rs 200 million in lost tax revenue.
The management of SITE, the city's largest industrial estate, has now decided to run all its industrial units without a break for the next 15 days in order to make up for the production loss. Further, over 45 percent of industrial units in Karachi's second largest estate, Korangi Industrial Area, have suffered a loss of Rs 500 million in two days.
Similarly, 55 percent of industries in Federal B Area were forced to remain closed on account of the prolonged power shutdown, resulting in a loss of over Rs 350 million. As 90 percent of the Federal B Area industrial units are export-oriented, the country's export sector too has taken a major hit. Only the Landhi industrial area has remained relatively unaffected by the power failure as 70 percent of the units there have their own power generating plants.
According to one estimate, industry in the country has been sustaining a loss of Rs 8.8 million per hour due to the power crisis, including frequent breakdowns and load-sheddings. Obviously, this is a totally unacceptable state of affairs that needs to be immediately addressed, if further production losses are to be avoided.
Karachi is home to more than 65 percent of the country's industry and 80 percent of its finance. Although Wapda has inducted another 100 megawatts of electricity in KESC's network as a stopgap arrangement, this is unlikely to solve the problem as the corporation's transmission infrastructure is unable at present to take additional load, and needs drastic revamping.
Secondly, the current load demand in Karachi is for an additional 250 megawatts a day, which Wapda may not be able to meet as its system is short of power due to increased load in its own service area. The problem has stemmed essentially from lack of action by successive governments despite repeated warnings sounded by policymakers that Karachi will suffer power shortages of 394 megawatts in 2005 and 506 megawatts in 2006.
According to the latest projections, the city will need an additional 1,300 megawatts of electricity in 2007 to play its role in achieving the high GDP growth targets set by the government. Meanwhile, the country's annual energy deficit has been rapidly mounting, and according to one projection it will be at least 1,000 megawatts from 2007 onwards.
The annual demand for electricity has been growing by six to seven percent per annum under pressure of industrialisation, and by the year 2012 we will need an additional 5,000 megawatts.
As pointed out above, a major cause of Karachi's chronic power supply breakdowns is its highly defective and inefficient transmission and distribution network. KESC continues to sustain operational losses, claiming that it should be allowed to raise power tariff to start investing in improving its existing infrastructure. All this makes one wonder as to why these issues were not settled prior to putting the KESC under the hammer.
The government should evolve a formula whereby work on upgrading and refurbishing of power transmission lines and other related infrastructure can be started forthwith, but without raising the power tariff which in most categories is already higher than what consumers elsewhere in the country pay for the utility. The two-day power supply suspension in Karachi's industrial heartland evokes the unhappy memory of a six-day shutdown in August last year.