Karachi Electric Supply Company (KESC) may face cut in supply of at least 650 megawatts from Water and Power Development Authority (Wapda) as Ministry of Water and Power (MoW&P) is considering various options to minimise power cuts in Punjab.
One of the proposals to increase electricity supply to the worst power shortages hit parts of the country, what sources claimed; the ministry is likely to reduce supply to KESC. The privately run public utility, which is responsible to supply power to its over two million consumers, would be facilitated with alternative arrangements of fuel, especially gas to compensate the shortage.
As there is a contract between government and KESC for supply of over 600MW for at least five, the ministry was looking for alternative arrangements of fuel for KESC. KESC may be provided additional gas or furnace oil at subsidised rates as it was done during last few summers. As per 5-year Power Purchase Agreement expiring in 2014, KESC imports about 650MW from NTDC, which is less than even 5 percent of the country's total dependable, installed capacity of 15000+ MW.
Furthermore, KESC itself has the enough capacity to generate electricity as per the city's demands provided what the company says, required fuel, especially gas from Sui Southern Gas Company (SSGC).
According to sources at SSGC, government has also consulted the gas company to inform the current supply position, demand and supply and other options to maximise gas supply to KESC for power generation. SSGC was currently providing over 200 MMCFD to KESC while for increasing supply to the power company, reduction or cut in the share of other consumers like Captive Power Plants, fertiliser etc was needed, they added.
The arrangements for reducing the power woes were likely to be made in a meeting or energy conference to be held shortly. It is worth mentioning here previously during the same proposed arrangements the supply of gas from SSGC to KESC was enhanced from the current 200 MMCFD (average) to at least 230 MMCFD at all times. In case of reduction on agreed oil or gas supply, Wapda intake was agreed to be increased proportionally.
However, according to sources, Karachiites will be more burdened through additional electricity tariff if the cheaper supply of power from Wapda was deducted and the power units of the company was mostly run on furnace oil. As the electricity from Wapda is "assured supply" the company could only not rely completely on its own power generating units which mostly are de-rated having there the factor of uncertainty.
On the other hand, through a statement, KESC on Tuesday has clarified that it has no current outstanding dues to NTDC after adjusting Tariff Differential payable to KESC by Ministry of Finance. Besides, the amount that KESC owes to SSGC is Rs 27 billion and not Rs 41 billion, and this amount has mainly to be settled against Rs 18 billion payable by Water Board to KESC, as agreed.
Since the new management in September 2008, a total amount of Rs 142 billion has been paid to NTDC against purchase of electricity worth Rs 131 billion. KESC said that during current fiscal year 2011-2012, Rs 46 billion have been paid to NTDC against power purchase of Rs 47 billion.
Current payable to NTDC is Rs 28.9 billion and more than this amount is KESC's receivable from Ministry of Finance on account of Tariff Differential to be payable directly to NTDC by Ministry of Finance as per Power Purchase Agreement. Therefore, after this transaction, actually nothing is payable to NTDC by KESC on current dues, while old outstanding arrears amount to Rs 10.15 billion are to be paid in monthly instalments of Rs 400 million which is regularly been paid and adjusted every month.
SSGC: KESC's current payables to Sui Southern Gas Company are at Rs 27 billion against purchase of natural gas, and not Rs 41 billion as being claimed by certain quarters. This amount has mainly to be settled against Rs 18 billion KESC's receivables from Karachi Water and Sewerage Board as agreed. Importantly, another key factor that can not be ignored is that the Federal and Provincial Government Departments and entities themselves owe KESC about Rs 60 billion, creating massive cash flow issues for the power utility.