22:03
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Karachi
The federal government has decided to examine the Karachi Electric Supply Company’s (KESC) sale and purchase agreement to assess the power utility’s efforts to increase electricity generation after its privatisation.
A committee already formed for the equitable distribution of electricity will assess the KESC’s responsibility for increasing its power-generation capacity.
These decisions were made in a recently held meeting of the Council of Common Interests (CCI), The News learnt on Friday.
The CCI had earlier decided to reduce 350 megawatts (MW) of electricity from the 700MW supplied to the KESC by the National Transmission and Despatch Company.
In return, the power utility is likely to be provided with Rs6 billion to buy around 2,000 metric tonnes of oil from the Pakistan State Oil (PSO) to activate its idle capacity for power generation.
Sindh complains
During the meeting, Sindh Chief Minister Syed Qaim Ali Shah complained that the federal government, through the committee for the equitable distribution of electricity, entered an agreement with the KESC to reduce 350MW from Karachi’s power supply without consulting the Sindh government, sources told The News.
Shah pointed out that the while negotiating with the KESC authorities, the provincial government was not taken on board by the federal authorities.
The CCI’s decisions about the curtailing of 350MW of the city’s power supply, the KESC’s efforts to increase its power generation capacity, its non-payment to the PSO and the Sui Southern Gas Company and the continuous subsidy it enjoys even after its privatisation generated a heated debate at meeting.
The finance division principal officer also complained that his department were not consulted during this process and asked for a detailed mechanism for utilising the KESC’s idle capacity and saving the 350MW of power from the national grid.
The water and power secretary noted that the KESC generally refrained from responding to the power ministry’s references.
She pointed out that since taking over her current charge last month; she had made maximum efforts for curbing loadshedding and improving recoveries.
The secretary observed that the distribution companies (Discos) in Sindh were mostly “inefficient”. “There were many instances of theft and about 7,000 unregistered meters in the province,” she added.
When Sindh Chief Secretary Raja Muhammad Abbas contended that the reduction of 350MW of electricity from Karachi’s power supply would only be possible when the KESC utilised its idle capacity, his Punjab counterpart argued that it was a unanimous decision and the special water and power secretary was assigned to finalise its arrangements.
The special water and power secretary said the agreement with the KESC to could be managed, but this move would require the provision of 2,000 metric tonnes of oil to the power utility through the Bin Qasim Port.
The CCI was informed that the overall requirement of the KESC was 1,600MW.
However, the adviser to the prime minister on petroleum, Dr Asim Hussain, questioned the provision of additional 2,000 metric tonnes of oil to the power utility and proposed that a mechanism needed to be devised for this purpose. “We have to sort out a doable [mechanism] for solving this issue,” he suggested.
The adviser also raised the issue of the non-payment of Rs40 billion that the KESC had to pay to the SSGC and the similar pending payment to the PSO.
The Punjab chief secretary pointed out that an agreement with the KESC was negotiated through the CCI-formed committee, according to which, the government had to supply 2,000 metric tonnes of oil to the power utility get the 350MW of electricity back into the national grid.
“For this purpose, he pointed out, “we have two options; one is to reduce the supply and the other is to sort out a mechanism.”
Federal Defense Minister Syed Naveed Qamar proposed that the issue of financing the cost of 2,000 metric tonnes of oil needed to be resolved and modalities sorted out as well. “The subsidy to the KESC will have to be reduced to provide fiscal space,” he noted.
Punjab Chief Minister Shahbaz Sharif said the KESC was a private entity and it owed Rs65 billion to the PSO.
He called for setting a timeline for the withdrawal of 350MW power supply. “Karachi is the hub of economic activity, yet Punjab is the largest hub of industries in the country,” he maintained.
Financial burden
The finance division principal officer explained that in order to cut 350MW of the KESC’s power supply, the finance division would have to provide Rs6 billion on account of the purchase of 2,000 metric tonnes of oil from the PSO.
Finance Minister Abdul Hafeez Sheikh responded that the financial responsibility was being burdened on the finance division in order to compensate the KESC.
At this point, Prime Minister Raja Pervez Ashraf, who was chairing the meeting, asked the adviser on petroleum for a “judicious solution”.
The adviser observed that there were production and financial problems and the KESC had 700 feeders, each with a generation capacity of 2.5MW of electricity.
Pointing out that the government was paying a tariff differential claim of Rs3 per unit, the adviser said he was not aware as to who would bear the “huge financial responsibility”.
The Sindh chief minister maintained that his province was facing a severe loadshedding crisis, particularly in the rural areas, where power outages were currently lasting around six hours a day. He added there were also the problems of floods and water shortage.
“The shortage of electricity should be equally distributed,” he remarked. “The KESC should improve its efficiency and increase its capacity of power generation.”
Wapda
The Sindh chief minister also raised the issue of the Water and Power Development Authority’s (Wapda) inflated bills. He demanded that the Wapda chairman should be asked to explain as to why inflated bills were being served to the provincial government given that there were prolonged power outages in the province.
Shah also proposed that the KESC authorities should be called to the next CCI meeting to discuss the issue of the remaining 350MW of electricity.
“Wapda needs to improve its performance and the CCI should form a committee comprising senior members to assess the authority’s performance as the government is unable to take any action,” he remarked.
The water and power secretary supported the argument of the Sindh chief minister.
Khyber-Pakhtunkhwa Chief minister Amir Haider Hoti asked as to whether or not the KESC was receiving 650MW within the constitutional provisions. “The government should not take dictation from the KESC,” he said.
Balochistan Chief Minister Aslam Raisani said the committee’s recommendations on the equal distribution of power should be implemented in letter and spirit.
Federal minister Syed Naveed Qamar opined that as winter was setting in and hydel generation would also be reduced to one-third of what it was now, a financial model would have to be devised in view of cash flow issues if the 350MW of power supply to the KESC had to be reduced by providing oil to the power utility.
The CCI decided that the modalities for reducing the 350MW and the financing the oil bill should be worked out.
It was also decided that the sale and purchase agreement of the KESC needed to be looked into to determine the responsibility of the power utility for increasing its power generation capacity.
Two new members, the finance division principal officer and a representative of the petroleum and natural resources ministry, will be included in the committee. The body was directed to submit its recommendations in the next CCI meeting.
The federal government has decided to examine the Karachi Electric Supply Company’s (KESC) sale and purchase agreement to assess the power utility’s efforts to increase electricity generation after its privatisation.
A committee already formed for the equitable distribution of electricity will assess the KESC’s responsibility for increasing its power-generation capacity.
These decisions were made in a recently held meeting of the Council of Common Interests (CCI), The News learnt on Friday.
The CCI had earlier decided to reduce 350 megawatts (MW) of electricity from the 700MW supplied to the KESC by the National Transmission and Despatch Company.
In return, the power utility is likely to be provided with Rs6 billion to buy around 2,000 metric tonnes of oil from the Pakistan State Oil (PSO) to activate its idle capacity for power generation.
Sindh complains
During the meeting, Sindh Chief Minister Syed Qaim Ali Shah complained that the federal government, through the committee for the equitable distribution of electricity, entered an agreement with the KESC to reduce 350MW from Karachi’s power supply without consulting the Sindh government, sources told The News.
Shah pointed out that the while negotiating with the KESC authorities, the provincial government was not taken on board by the federal authorities.
The CCI’s decisions about the curtailing of 350MW of the city’s power supply, the KESC’s efforts to increase its power generation capacity, its non-payment to the PSO and the Sui Southern Gas Company and the continuous subsidy it enjoys even after its privatisation generated a heated debate at meeting.
The finance division principal officer also complained that his department were not consulted during this process and asked for a detailed mechanism for utilising the KESC’s idle capacity and saving the 350MW of power from the national grid.
The water and power secretary noted that the KESC generally refrained from responding to the power ministry’s references.
She pointed out that since taking over her current charge last month; she had made maximum efforts for curbing loadshedding and improving recoveries.
The secretary observed that the distribution companies (Discos) in Sindh were mostly “inefficient”. “There were many instances of theft and about 7,000 unregistered meters in the province,” she added.
When Sindh Chief Secretary Raja Muhammad Abbas contended that the reduction of 350MW of electricity from Karachi’s power supply would only be possible when the KESC utilised its idle capacity, his Punjab counterpart argued that it was a unanimous decision and the special water and power secretary was assigned to finalise its arrangements.
The special water and power secretary said the agreement with the KESC to could be managed, but this move would require the provision of 2,000 metric tonnes of oil to the power utility through the Bin Qasim Port.
The CCI was informed that the overall requirement of the KESC was 1,600MW.
However, the adviser to the prime minister on petroleum, Dr Asim Hussain, questioned the provision of additional 2,000 metric tonnes of oil to the power utility and proposed that a mechanism needed to be devised for this purpose. “We have to sort out a doable [mechanism] for solving this issue,” he suggested.
The adviser also raised the issue of the non-payment of Rs40 billion that the KESC had to pay to the SSGC and the similar pending payment to the PSO.
The Punjab chief secretary pointed out that an agreement with the KESC was negotiated through the CCI-formed committee, according to which, the government had to supply 2,000 metric tonnes of oil to the power utility get the 350MW of electricity back into the national grid.
“For this purpose, he pointed out, “we have two options; one is to reduce the supply and the other is to sort out a mechanism.”
Federal Defense Minister Syed Naveed Qamar proposed that the issue of financing the cost of 2,000 metric tonnes of oil needed to be resolved and modalities sorted out as well. “The subsidy to the KESC will have to be reduced to provide fiscal space,” he noted.
Punjab Chief Minister Shahbaz Sharif said the KESC was a private entity and it owed Rs65 billion to the PSO.
He called for setting a timeline for the withdrawal of 350MW power supply. “Karachi is the hub of economic activity, yet Punjab is the largest hub of industries in the country,” he maintained.
Financial burden
The finance division principal officer explained that in order to cut 350MW of the KESC’s power supply, the finance division would have to provide Rs6 billion on account of the purchase of 2,000 metric tonnes of oil from the PSO.
Finance Minister Abdul Hafeez Sheikh responded that the financial responsibility was being burdened on the finance division in order to compensate the KESC.
At this point, Prime Minister Raja Pervez Ashraf, who was chairing the meeting, asked the adviser on petroleum for a “judicious solution”.
The adviser observed that there were production and financial problems and the KESC had 700 feeders, each with a generation capacity of 2.5MW of electricity.
Pointing out that the government was paying a tariff differential claim of Rs3 per unit, the adviser said he was not aware as to who would bear the “huge financial responsibility”.
The Sindh chief minister maintained that his province was facing a severe loadshedding crisis, particularly in the rural areas, where power outages were currently lasting around six hours a day. He added there were also the problems of floods and water shortage.
“The shortage of electricity should be equally distributed,” he remarked. “The KESC should improve its efficiency and increase its capacity of power generation.”
Wapda
The Sindh chief minister also raised the issue of the Water and Power Development Authority’s (Wapda) inflated bills. He demanded that the Wapda chairman should be asked to explain as to why inflated bills were being served to the provincial government given that there were prolonged power outages in the province.
Shah also proposed that the KESC authorities should be called to the next CCI meeting to discuss the issue of the remaining 350MW of electricity.
“Wapda needs to improve its performance and the CCI should form a committee comprising senior members to assess the authority’s performance as the government is unable to take any action,” he remarked.
The water and power secretary supported the argument of the Sindh chief minister.
Khyber-Pakhtunkhwa Chief minister Amir Haider Hoti asked as to whether or not the KESC was receiving 650MW within the constitutional provisions. “The government should not take dictation from the KESC,” he said.
Balochistan Chief Minister Aslam Raisani said the committee’s recommendations on the equal distribution of power should be implemented in letter and spirit.
Federal minister Syed Naveed Qamar opined that as winter was setting in and hydel generation would also be reduced to one-third of what it was now, a financial model would have to be devised in view of cash flow issues if the 350MW of power supply to the KESC had to be reduced by providing oil to the power utility.
The CCI decided that the modalities for reducing the 350MW and the financing the oil bill should be worked out.
It was also decided that the sale and purchase agreement of the KESC needed to be looked into to determine the responsibility of the power utility for increasing its power generation capacity.
Two new members, the finance division principal officer and a representative of the petroleum and natural resources ministry, will be included in the committee. The body was directed to submit its recommendations in the next CCI meeting.
Posted in: Karachi News
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