NEPRA approves a 10-year capacity expansion plan

KARACHI: Federation of Pakistan Chambers of Commerce & Industry’s (FPCCI) President, Mian Nasser Hyatt Maggo has asked Prime Minister Imran Khan to immediately postpone the proposed sale of K-Electric (KE) to save the industries of Karachi, Hub and Dhabeji.

In a letter sent to the Prime Minister, the FPCCI Chief said that KE is supplying electricity to industries in Karachi, Hub and Dhabeji on unfair tariffs, “We are writing this to request your immediate intervention to postpone the proposed sale of KE shares by its current owners.”

“In its present monopoly structure, it will have disastrous consequences for the industry of Karachi, Hub, and Dhabeji. It has already cost the national exchequer hundreds of billions and will continue to do so; if corrective decisions are not taken before its impending change of ownership,” the letter further said.

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Maggo said that KESC was privatised in the hope that it will bring efficiency to the system, which will result in lower tariffs for the citizens and industry — the area licensed to Karachi Electric Supply Corporation (KESC). The major flaw, at the time of privatisation was that it was kept as a monopoly having an exclusive licence for generation, transmission and distribution. The result was that KE continued with inefficient generation plants and higher losses in distribution.

Furthermore, NEPRA-determined tariffs for KE consumers are higher than the five DISCOs (Distribution Companies) in Punjab. KE is still reporting transmission and distribution (T&D) losses at 19.5 per cent after 16 years of privatisation; it was bound to bring down to 15pc by 2015, as a condition during privatisation in 2005; T&D losses in some government-run DISCOS are at 8.89pc (IESCO), 9.51pc (GEPCO), 9.62pc (FESCO), 12.4pc (LESCO), and 15.73pc (MEPCO).

Highly inefficient power plants keep generating costly electricity for KE at the cost of its consumers and industry; such redundant plants are being decommissioned elsewhere in the country and there is surplus capacity available in the national grid as well. Tax payers’ money worth billions of rupees has been paid in past 16 years as subsidy to KE to make up for its high cost of generation and distribution.

KE system has not been unbundled into generation, transmission, and distribution; whereas, WAPDA system was unbundled into NTDC, 10 DISCOs, and 5 GENCOs.

The people and industry of Karachi, Hub and Dhabeji are denied full access to the cheaper sources of electricity in the national generation basket like the rest of the country. The president urged the government and the cabinet members that before the change of ownership of KE is allowed, the following instructions may kindly be issued to the ministry of power and NEPRA.

A few suggestions were given by FPCCI’s president which includes unbundling of KE into a separate Distribution Company (DISCO) and an Independent Power Producer (IPP) company. The proposed KE IPP and other IPPs supplying to K-Electric may be allowed to enter into agreements with Central Power Purchasing Agreement (CPPAG) competitively on their own merits: one generation basket with one EMO – as suggested by NEPRA in its State of Industry Report 2020.

KE’s transmission system to become part of the national grid getting transmission/wheeling charge like NTDC system. KE’s DISCO be allowed to get power supply at the basket rate from CPPAG like and other DISCOs in the country.

KE region to be declared an open and non-exclusive area for electricity distribution bringing in the competition and its benefits for the electricity consumers.

The author is a senior business reporter with bylines in leading newspapers and magazines across Pakistan.

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