KARACHI, Oct 30: A top Karachi Electric Supply Company official said on Thursday that the power company would generate an additional 1,000 megawatts of electricity over the next three years through the rehabilitation of the existing generation system, rental power solutions and completion of 222MW and 560MW projects.

The CEO of the Abraaj-led KESC management, Naveed Ismail, announced at a news conference that the utility “today received its first new power generation in a decade, which is part of the 50MW rental power agreement that will provide a temporary power solution to Karachi”.

He was accompanied by the CEO of Abraaj (Pakistan), Syed Farrukh Abbas, at the press conference.

It was not clear whether the deal for rental power plant with Agrico was an economical and more viable solution than purchasing power from the two independent power producers.

He said load-shedding would be minimized in the coming months but did not rule out the continuation of the problem for some time.

Rental power will soon be followed by the commissioning of the 220MW Korangi Power Plant, 88MW of which will be available from the first week of November. This plant has already been delayed by almost a year due to the mismanagement of the Aljomaih-led corporate management.

Mr Ismail claimed that in total about 400MW additional capacity would be added to the KESC generation system by June 2009.

The new management, he said, had already made significant progress in a very short period as the 220MW project was back on track for completion and the company had signed a contract for 5OMWs rental power coming online starting from November end 2008 and negotiated a 56OMW contract and secured financing for the project.

While Naveed Ismail said there was no load-shedding, many areas of the city suffered outages which the media claimed was to the tune of 125MW. But the CEO of the KESC did not agree to it. The Bin Qasim Power plant was churning out 745MW.

Replying to questions, Naveed Ismail did not rule out load-shedding for the time being but said its duration would be minimized. But he evaded questions about giving a time frame for doing away with load-shedding.

He said efforts were also being made to procure about 50MW to 70MW from the industry that would be surplus to its needs.

He admitted that the transmission and distribution network of the KESC was highly overloaded due to the constantly rising demand for electricity in the city and in such a situation all the 15,000 transformers of the KESC were overloaded.

Referring to the existing generation system, he said 13 of the 19 production units had lived their lives. This had resulted in the reduction of 400MW of power from these obsolete units. Mr Ismail admitted that this derated capacity had resulted in higher cost of electricity production.

He also referred to high transmission and distribution losses -estimated to be over 40 per cent. He said $200 million spent since June 2005 on T&D had resulted in loss reduction of only 3.4 per cent. Due to inadequate and reactive maintenance, a few hours of rain can trip 40 per cent of the 11KV circuits.

The utility, he said, was facing a cash loss of Rs900Rs1,000 million per month with a total accumulated losses of Rs51 billion, over 50 per cent of outstanding receivables of Rs26 billion as of June 2008 were considered doubtful.

Responding to a question, he said Abraaj (Pakistan) had made an investment of $361 million and would enhance this amount to $1 billion by raising $750 million in the next two to three years. This amount would be utilised to remove the weaknesses in the transmission and distribution network of the company, he said.

Naveed Ismail said the KESC was also considering installing a coal generation unit under its low-cost generation mix in the future.

He also explained modality of Abraaj’s takeover.

Answering a question, he said that KESC had to pay Rs24 billion to Pepco for power purchase and up to Rs8 billion to the SSGC for gas supply.

Mr Abbas said his group managed a portfolio of Rs640 billion of top class 300 individuals and firms mostly from Saudi Arabia and the Emirates. “We also have business expertise and currently running 28 companies in 11 countries,” he said.

Asked whether he had any relationship with President Asif Ali Zardari and had that played any role in enabling Abraaj to take over the KESC, Mr Abbas the question should be better put to Mr Zardari. He, however, added that he had some relationship with the president from his wife’s side, but denied that it had anything to do with the contract.

He said: “transparency in every affairs is the key element in Abraaj’s business and investors have full faith in our group. I hope that good people from Pakistan will also invest with us.”

Mr Abbas said Abraaj had taken into confidence all political parties, including the PML-N, the ANP and the MQM before making an investment in the KESC.

He said that Al-Abraaj Capital had come to city with an investment of Rs31 billion while the total investment amount was Rs95 billion. More than 30 investors had provided this money and none of them was from Pakistan or India.

Al-Abraaj has a long-term plan to ensure the availability of 1,000MW while a short-term plan is about 400MW. A 220MW project would be operative by March 2009.

On the other hand, the utility has approached the local industry to give to the KESC whatever amount of electricity was spared at their end and it was expected that at least 70MW would be gained, said MrAbbas.

Amid a mounting demand for setting up citizens utility board to oversee their performance, the KESC management plans to constitute a voluntary KESC Governance Council. This will be a non-statutory and non-executive advisory board comprising eminent citizens of Karachi from all walks of life, who will provide periodic guidance to the KESC’s executive management. This will ensure greater public insight and accountability into the organizations activities and give the people of Karachi increased input into the affairs and conduct of their utility.