Ministry of Water and Power and K-Electric management on Wednesday constituted a sub-committee under the chairmanship of Secretary Water and Power, Younas Dagha, to evolve a mechanism for resolving all existing issues between the federal government and the utility, well informed sources told Business Recorder.
The panel will comprise representatives of Finance Ministry, K-Electric, National Transmission and Despatch Company (NTDC), Central Power Purchasing Agency (CPPA), Sui Southern Gas Company (SSGC) and Government of Sindh. The meeting presided over by the Minister for Water and Power Khawaja Asif were held in a cordial atmosphere in marked contrast to previous bitter sessions. The Minister took the representative of Abraj Group Qamar Lodhi and Chief Executive Officer (CEO) Tayyab Tarin to his office prior to starting the meeting.
"Khawaja Asif showed hospitality today instead of hostility that he did in the previous meeting," said one of the participants. Minister for Petroleum and Natural Resources, Shahid Khaqan Abbasi threatened to withdraw natural gas supply to KE, and advised the utility to purchase LNG as it will not be given priority in gas supply. Jamshoro power plant will have a priority as far as indigenous gas is concerned, he reportedly added.
The sub-committee will hold a meeting on Friday (tomorrow) to reconcile the amount of NTDC's receivables of Rs 35 billion against K-Electric, terms and conditions for new Power Purchase Agreement (PPA) with respect to future of 650 MW electricity, Implementation Agreement (IA), gas bill and claims of K Electric against federal and provincial governments. The sub-committee will come up with firm recommendations to the main committee by September 15.
According to the government, the financial impact of withdrawal of 650 MW by KE from NTDC at basket rates resulted in undue benefits to KE and consequently created serious financial implications for NTDC and the sector as a whole. In addition to a waiver of Rs 31 billion granted by ECC and payable by KE to NTDC in year 2009 - the difference between basket rate and marginal cost - the analysis of data on the basis of benchmarks/assumptions of NEPRA for the year July, 2012 to June 2013 shows that NTDC incurred a cost of around Rs 106 billion for the supply of 650 MW to KE; and it could only invoice/bill KE for around Rs 42 billion due to an ECC decision to supply at basket rates implying thereby that the additional cost of around Rs 64 billion was borne by other distribution companies and their consumers across Pakistan.
According to sources, KE management informed the meeting that it has fulfilled its obligations with respect to investment in generation and infrastructure. "Ministry of Water and Power has made it clear that 650 MW will not be supplied to KE as per previous terms and conditions. Presently, 650 MW electricity is being supplied to KE without any agreement," the sources added. Federal government, however, is angered at KE management for getting stay orders due to which the issues are now being sorted out, said an official on condition of anonymity.