MUSHTAQ GHUMMAN
ISLAMABAD: Secretary Power Division Yousuf Naseem Khokhar has reportedly accused Karachi Electric (KE) of “staging drama” of electricity crisis in Karachi to get a favourable decision from Nepra on tariff reconsideration petition at the cost of citizens of Karachi, well-informed sources told Business Recorder.
He made these remarks at a recent meeting of Cabinet Committee on Energy (CCoE) held in Governor’s House, Karachi, on issues relating to KE.
Prime Minister, Shahid Khaqan Abbasi who is also the chairman of CCoE argued that existing load shedding and prolonged outages of electricity in Karachi city have emerged as a serious issue due to non provision of gas to K-Electric by Sui Southern Gas Company Limited (SSGCL). Due to this the people of Karachi are suffering a lot.
The sources said, Chief Minister, Punjab, Mian Shahbaz Sharif informed the meeting that K-Electric is getting 650 MW electricity from NTDC which should ensure smooth provision of electricity to consumers. K-Electric’s issues have been considered at various forums, including CCI, since 2011. K-Electric claimed that they would run the plants on furnace oil but failed to do so. He stated that issues of K-Electric are serious and must be resolved so that the people of Karachi do not suffer during harsh summer months.
Chief Minister Sindh Syed Murad Ali Shah informed the meeting that the recent power outages in Karachi were due to negligence of K-Electric. He stated that no plant has so far been run on furnace oil by K-Electric and they should be held responsible for this negligence. He further stated that SSGCL stance for payment of outstanding dues by K-Electric is not justified. Gas is available and it is the first right of the province which produces gas but SSGCL is not providing requisite supply to K-Electric. The Chief Minister Sindh requested the Prime Minister to intervene in the matter and direct SSGCL to restore gas supply to K-Electric immediately, since both entities involved in the crisis (K-Electric and SSGC) are partially owned by the Federal Government.
Governor Sindh Muhammad Zubair endorsed the stance of the Chief Minister Sindh, stating that that SSGCL discontinued supply of gas on the plea that a GSA between the two entities has expired. However, the GSA has not expired. Moreover, there should be early reconciliation of accounts between SSGCL and K-Electric for which an appropriate mechanism should be evolved. However, it is not advisable to let the people of Karachi suffer till formulation of such mechanism.
However, Managing Director, SSGCL informed the meeting that there were three issues viz: (i) payment of the security deposits/outstanding dues, (ii) signing of ToRs for reconciliation; and (iii) signing of Gas Sale Agreement (GSA). He said that SSGCL requires concurrence and assurance from the Government of Pakistan in this regard and several agencies are hounding SSGC on the allegation that gas is being supplied to a defaulter (K-Electric) , without a GSA.
The Chief Executive Officer of K-Electric briefed the meeting that their power plants of 500MW are running efficiently. However, there are liabilities of Karachi Water & Sewerage Board (KWSB) which should be cleared. He stated that TORs have been shared with SSGCL and Board’s approval is awaited. A GSA can be signed within 30 days, once ToRs for reconciliation of liabilities with Federal and Provincial Governments are finalized and signed by all the three parties.
Minister for Power, Sardar Awais Ahmad Khan Leghari stated that a review petition on tariff for K-Electric by the Government of Pakistan is still pending with NEPRA. He requested the Prime Minister to direct NEPRA for an early decision based on ground realities and prudent practices keeping in view the interest of consumers and investment facilitation. He further added that no new request or instruction is required to be made from Government of Pakistan. He also stated that K-Electric has not so far applied to NEPRA for provisional LNG Tariff despite their repeated requests.
Secretary, Power Division, Yousuf Naseem Khokhar further clarified that under section 31(4) of the NEPRA Act 1997, the review by Government of Pakistan is restricted to the protection of public interest. He further stated that determination of tariff is the exclusive domain of the Regulator based on data-based evidence produced before them.
“Secretary Power Division expressed his apprehension that the timing of the present crisis was perhaps was an effort aimed at building up pressure to get a favourable decision at the cost of citizens of Karachi,” the sources said, adding that he also pointed out that NEPRA had clearly stated in its report on the crisis that the present management of Captions has failed to invest in generation, transmission and distribution. NTDC/CPPA was, therefore, forced to continue supply of 650 MW power to Captions for the sake of citizens of Karachi.
Prime Minister stated that it was a rare opportunity that one of the world’s best and biggest utility companies was interested in buying controlling stake in K-Electric. No investor will venture in such investment until and unless there are reasonable prospects of good returns, adding that in case reported deal of sale of K-Electric does not materialize, there is an imminent possibility that the K-Electric will be in a dire crisis. In such a scenario, Government will be left with no other alternative except doling out bailout packages to K-Electric in order to ensure continuous supply of power to Karachi. Hence, there was an urgent need for early decision by NEPRA on the review request filed by Power Division.
After detailed discussion, the CCoE took the following decisions: (i) Sui Southern Gas Company Limited (SSGCL) to resume supply of gas to K-Electric immediately; (ii) SSGCL and K-Electric will initiate process for signing Gas Sales Agreement for Natural Gas as well as LNG within 15 days; (iii) ToRs for reconciliations/ settlement of dues between SSGCL, K-Electric and Karachi Water & Sewerage Board (KWSB) to be finalized and signed within 15 days. Adviser to Prime Minister on Finance to ensure that required actions are completed within stipulated time; (iv) NEPRA to expedite its decision on review petition for revision of multi-year tariff for K-Electric, submitted by the Power Division, in order to give a realistic tariff for the utility; and (v) K-Electric to immediately approach NEPRA for determination of provisional tariff for conversion of its Power Plants to LNG, and Power Division to support K-Electric in this regard.
Last week, KE had filed a petition with NEPRA to get provisional tariff for use of RLNG in its plants in lieu of furnace oil, in case the utility requires more fuel after exhausting its natural gas quota of 170 MMCDC.
