ISLAMABAD: The federal government and K-Electric on Wednesday could not settle payment mechanism for additional power supply to Karachi as consumers in the metropolitan city continued to suffer power shortages.

Informed sources said a high-level meeting was called at the power division on the directives of Prime Minister Imran Khan to address electricity supply problems in Karachi after Governor Sindh Imran Ismail took a KE delegation to PM Office.

The meeting at the power division was presided over by Minister for Energy Hammad Azhar but the power division did not issue any statement about it. Separately, a brief statement issued by the press information department said the meeting was attended by Governor Ismail, Minister Azhar and the secretaries of finance and power.

Company directed to resolve issues hindering uninterrupted supply within 10 days

The statement said the KE management was told that the federal government had addressed all issues of the power utility and it was clearly KE’s responsibility to ensure uninterrupted power supply to residents of Karachi.

Mr Azhar reiterated the resolve to provide more than 400 megawatts to KE.

The KE was directed to resolve all issues hindering uninterrupted power supply to Karachi within 10 days.

An official said the hot weather currently hitting Karachi was expected to be over within these 10 days yet the issue would remain unresolved as major political and financial stakes were involved and financial signing authorities were reluctant to burn their fingers in such issues.

Informed sources said a group of cabinet members and top bureaucrats had raised red flags over supply of about 1,200MW of electricity to the KE without any power purchase agreement or payment mechanism.

This group has warned the prime minister and the power division that while the federal government could provide more than 2,000MW electricity to the KE within 24 hours as surplus generation was available in national grid, the KE did not have the system in place to absorb this additional supply.

They also complained that the KE had not placed an order to Pakistan LNG Limited for additional gas supply even for the testing of its new Bin Qasim plant whose first unit should have been operational by June with generation capacity of 450MW followed by another unit of same capacity in October. This was because the plant was not ready yet, they said.

The political problem, however, for the federal government is that neither it can stop power supply to the KE from national grid, nor had it been able to provide legal cover to power supply to KE taking place without any payment.

The power division contends that Rs212bn are payable by KE to the Central Power Purchasing Agency (CPPA)/National Transmission and Dispatch Company (NTDC). The Cabinet Committee on Energy (CCoE) had decided last year to provide 1,350-1,400MW additional power supply from national grid to the KE to address sufferings of the city people because of power shortages. The NTDC has already started supply as part of the additional power.

The KE had been seeking adjustment of the abovementioned payments and those arising out of additional power supply (about 350-400MW over and above the previous 650MW) against tariff differential subsidy payable by the ministry of finance. Incidentally, the power purchase agreement on old 650MW supply had expired in June 2015 but power supply to the KE continues.

The power division told ECC a few days ago that the KE was billing and collecting bills from consumers for entire 1,100MW supply from national grid, including additional 450MW, but was not making payments to the NTDC for additional supply. The power division and the NTDC had recently threatened to stop power supply to the KE. However, the political connection prevailed over the power division and supplies continued unabated.

Published in Dawn, June 3rd, 2021