20:52
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Karachi
The privatised Karachi Electric Supply Company (KESC) has stated that the purchase of 650 MWs of electricity from the National Transmission and Dispatch Company (NTDC) is its contractual right under a five-year legally binding Power Purchase Agreement (PPA) until early 2015.
This purchase agreement is not just a legal binding between the two power entities; in fact it has a direct impact on the lives of the 20 million inhabitants of the largest Metropolis of the country, said the KESC in a press release.
The KESC said that the total electricity currently purchased from NTDC was less than 5 per cent of the National Grid which was a mix of hydel, thermal, and nuclear plants. These generation sources had developed over the years with significant contribution from Karachi, the economic hub of the country contributing 25 percent of the national GDP. Furthermore, curtailing 350 MW from NTDC’s supply from Karachi would arguably reduce load shedding by less than 30 minutes across the country, whilst its negative fall-out in Karachi would be several hours of enhanced load shedding, something that the city could ill-afford given the precarious law & order situation.
The KESC further stated that it had no “idle” capacity to spare; anyone familiar with power utility operations could understand that there was a vast difference between historical ‘name plate’ capacity of a generation plant and its current ‘de-rated actual dependable capacity’ with the latter being highly vulnerable to fuel supply issues and gas pressure availability which has been erratic at best and did not permit any ‘idle’ generation capacity. Likewise, as is the case with any other industrial machine, KESC’s generating units also have to undergo regular scheduled preventive maintenance in line with manufacturers’ recommendations. Prudent Utility Practice also demands that KESC maintain a ‘spinning reserve’ of at least 200-300 MW to ensure the integrity and dependability of the system.
The KESC’s power plants, like other plants in the rest of the country, have not been able to produce electricity at their optimum because of the consistently reducing gas supply over the past several years, a fact verifiable from SSGC’s supply charts. The current gas supply crisis at KESC’s generation plants has reached a chronic level as it is being supplied around 120mmcfd (million metric cubic feet per day) of natural gas much against its total winter requirement of 250 mmcfd leading to sub-optimal utilization of its gas turbines. The key issues and impediments plaguing the power sector in the country are circular debt and the declining share of the power sector in the overall Gas allocation which need to be addressed by the Government on an immediate basis.
It is primarily due to this erratic and short supply of gas to the KESC from SSGC, that the power utility has had to purchase additional Furnace Oil worth Rs60 billion during the past three years, which, in effect, has pushed the power tariff northwards causing undue difficulties to its end consumers. Notably, reference to the oft misquoted and inflated payables to SSGC, KESC stated that it is the Government that has to pay Rs20 billion directly to SSGC on account of the unpaid and accumulated power bills of KWSB. For its end of the payable of approximately Rs8 billion to SSGC, KESC has in the recent history offered a number of times a payment plan to the gas utility, awaiting agreement from the latter.
Unilaterally reducing its contractually binding 650 MW supply from the National Grid would be tantamount to penalizing the privatized entity which has in the past three years invested over US$ 1 billion in generation, transmission, distribution and system improvement, in the form of equity and debt without any sovereign guarantee from the Government of Pakistan. This investment has translated into an incremental 1000 MWs of KESC’s generation capacity, including its newly commissioned 560-MW state-of-the-art plant at Bin Qasim which too is awaiting its committed 130mmcfd of additional gas supply. This capacity enhancement had been based on the demand-supply projections and carefully chalked business plans taking into consideration the 650 MW power purchased from NTDC, hence, any sudden and unplanned curtailment from NTDC would create a serious disequilibrium in the local system.
In its concluding statement, the KESC said that with all the intensive capital investment and the tireless efforts of its management and workforce, the power supply situation in Karachi today is relatively better than in previous years. This progressive equation, if reversed, would not only be detrimental to existing and potential foreign investors in KESC, but will also have a negative spill-over on the entire energy sector and national economy.
The privatised Karachi Electric Supply Company (KESC) has stated that the purchase of 650 MWs of electricity from the National Transmission and Dispatch Company (NTDC) is its contractual right under a five-year legally binding Power Purchase Agreement (PPA) until early 2015.
This purchase agreement is not just a legal binding between the two power entities; in fact it has a direct impact on the lives of the 20 million inhabitants of the largest Metropolis of the country, said the KESC in a press release.
The KESC said that the total electricity currently purchased from NTDC was less than 5 per cent of the National Grid which was a mix of hydel, thermal, and nuclear plants. These generation sources had developed over the years with significant contribution from Karachi, the economic hub of the country contributing 25 percent of the national GDP. Furthermore, curtailing 350 MW from NTDC’s supply from Karachi would arguably reduce load shedding by less than 30 minutes across the country, whilst its negative fall-out in Karachi would be several hours of enhanced load shedding, something that the city could ill-afford given the precarious law & order situation.
The KESC further stated that it had no “idle” capacity to spare; anyone familiar with power utility operations could understand that there was a vast difference between historical ‘name plate’ capacity of a generation plant and its current ‘de-rated actual dependable capacity’ with the latter being highly vulnerable to fuel supply issues and gas pressure availability which has been erratic at best and did not permit any ‘idle’ generation capacity. Likewise, as is the case with any other industrial machine, KESC’s generating units also have to undergo regular scheduled preventive maintenance in line with manufacturers’ recommendations. Prudent Utility Practice also demands that KESC maintain a ‘spinning reserve’ of at least 200-300 MW to ensure the integrity and dependability of the system.
The KESC’s power plants, like other plants in the rest of the country, have not been able to produce electricity at their optimum because of the consistently reducing gas supply over the past several years, a fact verifiable from SSGC’s supply charts. The current gas supply crisis at KESC’s generation plants has reached a chronic level as it is being supplied around 120mmcfd (million metric cubic feet per day) of natural gas much against its total winter requirement of 250 mmcfd leading to sub-optimal utilization of its gas turbines. The key issues and impediments plaguing the power sector in the country are circular debt and the declining share of the power sector in the overall Gas allocation which need to be addressed by the Government on an immediate basis.
It is primarily due to this erratic and short supply of gas to the KESC from SSGC, that the power utility has had to purchase additional Furnace Oil worth Rs60 billion during the past three years, which, in effect, has pushed the power tariff northwards causing undue difficulties to its end consumers. Notably, reference to the oft misquoted and inflated payables to SSGC, KESC stated that it is the Government that has to pay Rs20 billion directly to SSGC on account of the unpaid and accumulated power bills of KWSB. For its end of the payable of approximately Rs8 billion to SSGC, KESC has in the recent history offered a number of times a payment plan to the gas utility, awaiting agreement from the latter.
Unilaterally reducing its contractually binding 650 MW supply from the National Grid would be tantamount to penalizing the privatized entity which has in the past three years invested over US$ 1 billion in generation, transmission, distribution and system improvement, in the form of equity and debt without any sovereign guarantee from the Government of Pakistan. This investment has translated into an incremental 1000 MWs of KESC’s generation capacity, including its newly commissioned 560-MW state-of-the-art plant at Bin Qasim which too is awaiting its committed 130mmcfd of additional gas supply. This capacity enhancement had been based on the demand-supply projections and carefully chalked business plans taking into consideration the 650 MW power purchased from NTDC, hence, any sudden and unplanned curtailment from NTDC would create a serious disequilibrium in the local system.
In its concluding statement, the KESC said that with all the intensive capital investment and the tireless efforts of its management and workforce, the power supply situation in Karachi today is relatively better than in previous years. This progressive equation, if reversed, would not only be detrimental to existing and potential foreign investors in KESC, but will also have a negative spill-over on the entire energy sector and national economy.
Posted in: Karachi News
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