ISLAMABAD: The Power Division has reportedly failed to get a favourable decision from the Cabinet Committee on Energy (CCoE) with respect to the future of the 650 MW electricity supplied to Karachi Electric since 25 January, 2015 due to poorly drafted summary, well-informed sources told Business Recorder.
According to sources, National Transmission and Despatch Company Limited (NTDCL) and Karachi Electric signed a Power Purchase Agreement (PPA) in 2010 under which 650 MW of power was agreed to be supplied to Karachi Electric from the national grid.
“The PPA expired on January 15, 2015, however, NTDCL even after expiry of PPA, has been supplying 650 MW of electricity to Karachi Electric in compliance with the policy decision of the government to ensure continuous supply of electricity to Karachi,” the sources added.
The case for amending/revisiting Power Purchase Agreement with Karachi Electric was under consideration by the Abbasi-led administration with the inter-ministerial committee constituted for this purpose under the chairmanship of Minister for Finance. The committee did not resolve the issue by the end of the tenure of the government. The NTDCL reported that Nepra, in its decision of January 25, 2018 issued under Rule 4(9) & 4(10) of the Nepra Fine Rules, has determined that the act of supply electricity by NTDCL to KE, in the absence of a PPA, is in violation of the existing laws and has accordingly imposed a fine of Rs 10,000,000 on NTDCL. In its decision, Nepra has found NTDCL to be “delinquent” and “irresponsible” for unauthorized supply of electricity to KE in the absence of PPA.
The Power Division stated that in view of the fine imposed by Nepra, NTDCL is constrained to consider whether it should discontinue supplying electricity to K-Electric, thereby depriving the citizens of Karachi of this necessity. Furthermore, NTDC also feels that Nepra is perhaps oblivious of the fact that fine will also ultimately be borne by the national exchequer.
According to sources, Power Division requested Cabinet Committee on Energy (CCoE) to guide NTDCL on the issue and provide a policy decision with regard to continuity of supply of electricity to KE or otherwise.
During ensuing discussion, the former Secretary to former prime minister Shahid Khaqan Abbasi pointed that under Rules of Business, 1973, that a summary is required to be submitted to the cabinet or its committees with complete background, relevant facts and concrete proposals. However, the summary lacked such a proposal.
The former Prime Minister while agreeing to the view of Fawad Hasan Fawad directed the Power Division to resubmit a summary to the CCoE with viable proposals.
M/s Shanghai Electric Power (SEP) is ready to purchase 66.4 per cent stake of M/s Abraaj Group in KE through a Dubai-based Special Purpose Vehicle (SPV) as early as possible but hindrance at the level of Ministries is delaying the smooth execution of deal.
Power Division maintains that KE owes Rs 69 billion of energy purchased from Central Power Purchasing Agency Guaranteed (CPPA-G) which is parked in total inter-circular debt hovering at around Rs 573 billion.