Uncertainty looms over city’s power situation due to lack of key KE deals

KARACHI: K-Electric Chief Executive Officer Moonis Alvi on Wednesday said that the absence of a valid Gas Supply Agreement (GSA) with Sui Southern Gas Company (SSGC) and an expired Power Purchase Agreement (PPA) with the National Transmission and Despatch Company (NTDC) were aggravating the uncertainty around city’s power supply.

Replying to queries during a press conference, he said that though the federal government was fully cognizant of the need to urgently address the issues of GSA and PPA, the final decisions in this regard were still pending.

“These issues are impediments to permanently addressing Karachi’s supply-demand gap,” he said.

Connecting the issue of KE’s payables to SSGC to the delay in the finalisation of the GSA, KE’s chief financial officer Aamir Ghaziani categorically stated that KE owed SSGC only Rs13.7 billion on a principal basis and the issue of ballooning mark-up charged by SSGC was sub judice.

“K-Electric’s receivables and payables should be seen on a holistic basis and netted off against each other since both are related to government entities. If only the principle amounts that KE is owed and KE has to pay are compared and netted off, then KE stands to receive Rs80bn,” he averred.

Mr Alvi said that KE’s flagship 900MW power plant, BQPS-III, was progressing on a fast track and the gas turbine, generator and heat recovery boiler for the first unit of 450MW had arrived at the power utility’s Bin Qasim Power Complex.

The power utility claims it owes SSGC Rs13.7bn principal amount as issue of mark-up is in court

“Steam turbine and transformers for the first unit are on the way to the site. All relevant civil works are progressing swiftly for the installation with the target of ensuring that the first unit is ready to be commissioned by the summer of 2021, and the second unit of 450MW by the end of the year,” he added.

He said that the RLNG-based power plant would go a long way in meeting Karachi’s power demand and ensuring the city and its industries stayed energised to play their due role in the national economy.

He said that the National Electric Power Regulatory Authority (Nepra) had also recently approved the modification in the generation licence of KE, with the addition of the 900MW RLNG-powered BQPS-III to the power utility’s generation capacity.

Mr Alvi said that the BQPS-III would result in lower import costs for the government, affordable power for consumers and a much smaller carbon footprint as compared to furnace oil power plants.

“I am confident that we will continue to have the support of the government and other stakeholders since there is no doubt that the upcoming 900MW RLNG power plant is very crucial for Karachi,” he added.

Fulfilment of govt commitments sought

The KE chief said that while the approval of the 900MW plant was a vital element towards meeting Karachi’s growing power demands, other commitments also needed to be fulfilled in a timely manner for this reality to be realised.

He said that heads of agreement with Pakistan LNG Limited (PLL) for supply of 150mmcfd of gas for BQPS-III had already been signed.

He said that the power utility appreciated the decision of the Oil and Gas Regulatory Authority (Ogra) to approve KE’s application for a licence to construct and operate a gas pipeline that would supply RLNG for the BQPS-III plant and supplementing fuel requirement of the power plants located at its Bin Qasim Power Complex.

“Further, keeping in view surplus of power in national grid, KE would off-take additional supply of 1,400MW from the national grid to mitigate demand-supply gap in future,” he added.

“Additional supply of 1,400MW will be procured in phases and the first phase will include 450MW starting from April 2021 after the completion of rehabilitation works on Jamshoro-KDA transmission lines and NKI cross tripping tests,” he added.

He said that NTDC’s support for timely completion of interconnection facilities would be of immense importance.