The Finance Ministry has released Rs45 billion tariff differential within four months against total allocation of Rs50 billion for the entire financial year to National Transmission and Dispatch Company (NTDC) for electricity purchased by the Karachi Electric Supply Company (KESC).
The NTDC had signed Power Purchase Agreement (PPA) with KESC on January 26, 2012, according to which the former supplies 650 MW of electricity to Karachi.
"Finance Ministry paid tariff differential of Rs45 billion during FY 12 and Rs114.3 billion since signing of PPA directly with NTDC. KESC will also pay Rs38 billion as tariff differential to NTDC," documents submitted by the KESC to the Senate's Standing Committee on Water and Power showed.
NTDC supplied power to KESC at Disco rate which varied from Rs8.5 per unit (including GST) to Rs12 per unit (including GST).
According to the documents, GoP receivables are Rs67.2 billion as of today. Payables have increased by Rs36.4 billion since September 2008.
The documents further disclose that fuel mix - gas to furnace oil (including IPPs) improved to 64:36 from 55:45 last year. However, due to increase in fuel prices, negative impact on cash flow was recorded at Rs5.1 billion.
Gas average supply was 169 mmcfd (FY 11, 153 mmcfd, FY 12 -188 mmcfd) against allocated level of 276 mmcfd resulting in additional Rs30. 7 billion incurred on furnace oil during the last three years.
Impact of reduction in gas supply led to increase in Fuel Surcharge Adjustment (FSA), increase in circular debt and negatively impacted on recovery ratio due to increase in tariff. Each 25 mmcfd reduction in gas supply translates into tariff increase of 90 paisa per unit. KESC's current tariff has risen from Rs15.07 to Rs17.07 per unit over the last one year.
KESC has also raised $35 million (Rs3.2 billion) financing from international and local lenders. International Finance Corporation (IFC) an arm of World Bank and Asian Development Bank (ADB) disbursed $15 million each. This amount has been paid to Harbin for PTOC against GT 1, 2, 3 and 4 of 560-megawatt plant. The company also converted short term financing of Rs1.5 billion to Rs2 billion.
The documents further show that it is facing cash loss of $14-15 million per month due to inability to purchase sufficient furnace oil leading to a reduction in electricity production.
Outstanding sovereign issues are resulting in adverse material impact on financial and operational viability including accumulated losses of $700 million contingent liability of $600 million (November 2008) and circular debt of $250 million.