Ministry of Water and Power is said to be under immense domestic and the UAE pressure to continue 650MW supply to K-Electric (formerly KESC) from the national grid at subsidised rates, well informed sources in the Ministry told Business Recorder. Presently, National Transmission and Dispatch Company (NTDC) is supplying 650MW electricity to K-Electric under a Power Purchase Agreement (PPA) which is about to expire on January 25, 2015.
Insiders claim that some government stalwarts argue that the government should slash electricity supply to 300MW only in case pressure exists. Abraaj Group of Dubai fully controls KE via the holding company, KES Power Limited, whicch holds 72.58% of its shares Chief Minister Sindh, Syed Qaim Ali Shah and MQM leader Farooq Sattar have both written letters, urging the federal government to continue supply of 650MW to K-Electric from the national grid to ensure supply to the country's economic hub.
A delegation of K-Electric headed by its Chairman Tabish Gohar held a meeting with the Ministry of Water and Power's team led by Federal Minister for Water and Power Khawaja Asif, who has been one of the key critics of the applicable PPA. Khawaja Asif recently told a parliamentary panel: "I know the first owners of the company after it was privatised who later sold their shares to some other party who, after minting money, further sold the shares; I believe the buyers made profits equal to what they paid to buy the company, and in my opinion the two transactions have a question mark." He said now some South Korean company was set to buy KE, which would be the third party to own the company after privatisation.
Last week, Minister of State for Water and Power, Abid Sher Ali announced that the government will not extend the existing PPA with K-Electric as, according to him, Prime Minister Nawaz Sharif has called for a review of the arrangements. When contacted a spokesman for the Ministry of Water and Power said that the Ministry is considering different options but nothing has been finalised so far.
An insider told Business Recorder that the ministry will send a summary to Prime Minister Nawaz Sharif itemising different options. Another official said the government might place the proposal before the Council of Common Interests (CCI). Managing Director National Transmission and Dispatch Company Tahir Mehmoood said that as NTDC is the executing agency "whatever decision the government takes it will be implemented."
In reply to a question, he said NTDC's Director Legal is engaged in meetings with the ministry to finalise new arrangements. Sources in K-Electric said the meeting between the Ministry and top management of K-Electric was meant to break the ice between the two. K-Electric management, sources said, has requested an extension in PPA to ensure smooth supply to Karachi. He further maintained that the government can continue power supply to K-Electric sans PPA as was done prior to 2009. National Accountability Bureau (NAB) is investigating the PPA signed between the PPP government and the KESC management in 2009.