Four major consecutive power breakdowns in six days in the second week of July in Karachi had made the life of millions of residents miserable in the holy month of Ramazan.

The outages subsequently led to widespread water shortage, with the common man having to do without both electricity and water for 18-36 hours straight. Agitation against the utility company had turned into riots in some areas as well.

Nonetheless, both the federal and provincial governments largely remained indifferent to the crisis, choosing instead to simply playing the ‘blame game’. In fact, laxity on the part of the federal government, which has nominated three directors on K-Electric’s board, has compounded the problem.

The power company lacked a contingency plan for Ramazan. And laxity on the part of the government, which has nominated three directors on K-Electric’s board, compounded the problem

It was painfully evident that the power company lacked a contingency plan for the summer season and Ramazan. .

Meanwhile, there have been renewed demands by some industrial circles and civil society representatives that the federal government take over control of the privatised utility company in order to provide some relief to the domestic, commercial and industrial consumers who have long suffered at the hands of the company.

However, the government has not moved in this direction. By March 31, K-Electric’s total liabilities were around Rs177bn, whereas it was privatised in 2005 with zero liabilities. Ironically, its payables only to state-controlled entities like the NTDC, PSO and Sui Southern Gas were over Rs67bn by end-March.

Still, the government continues to favour the company, as it practically renewed its agreement to supply 650MW electricity daily on subsidised rates and on credit after the previous contract had expired this January.

It was a mistake to handover the company and its management control to Saudi Arabia’s Aljomaih Holding Company, who reportedly had no previous experience of either managing or operating a utility concern.

Then in 2008, in violation of the agreement signed with the Privatisation Commission in 2005 that disallowed selling a part or whole of its shares before three years, the group transferred a majority of its shareholding and control to the UAE’s Abraaj Capital. The new buyers were required to invest $500m within three years to improve the infrastructure in order to turnaround the company.

K-Electric’s power generation through its own sources has improved only marginally in the post-privatisation period, in spite of the investors’ repeated claims about having made significant addition to the installed generation capacity. During FY13-14, the company generated 8,709GWh, against 8,567GWh in 2012-13 and 7,964GWh in 2009-10.

The government has practically renewed its agreement to supply 650MW electricity daily on subsidised rates after the previous contract had expired this January

Its two gas turbine power plants — Korangi I and SITE I, each of 20MW — have been closed for quite some time, while the dual-fired power plants — Bin Qasim I (1,260MW) and Bin Qasim II (560MW) — and the Korangi Thermal Power Station (125MW) are not being run at full capacity reportedly owing to inadequate gas supply and the inability to use costly furnace oil.

K-Electric also owns and operates the Korangi combined-cycle power plant (220MW) and two gas turbine power stations — Korangi II and SITE II — each of 97MW capacity. Thus, it currently has a cumulative installed capacity of 2,359MW, virtually unchanged from 2012-13, and up slightly from 1,946MW in 2009-10.

And including supplies from independent power producers, Kanupp and the NTDC, K-Electric’s total capacity (after accounting for de-commissioned plants and net addition of 47.5MW) is 2,951MW, which translates into about 15,800GWh of energy.

The NTDC has reportedly projected peak demand this summer at 5,516MW — leading to a huge demand-supply deficit.

Peak demand in 2006-07 in the company’s licensed area was registered at 2,349MW, and the demand has been consistently growing at about 7pc annually.

On the transmission and distribution side as well, K-Electric has not made the required investment, and the outdated and fragile system remains incapable of taking on any additional power load. In 2013-14, the company had eight 220kV grid stations of 3,000MVA, 54 132kV stations of 4,679MVA, and three 66kV stations of 60MVA. In comparison, in 2009-10, it owned seven 220kV grid stations of 3,000MVA, 48 32kV grid stations of 4,363MVA, and three 66kV grid stations of 60MVA.

According to its contract with the government, the buyers were to invest Rs2bn within five years to augment the transmission and distribution system.

But the real state of the system can be judged from the fact that there were 252 planned outages in the 220kV system for 99,767 minutes in 2013-14, and another 79 forced outages of a total 21,423 minutes. Likewise, there were 660 planned outages and 359 forced outages in the 132kV system for a total duration of 85,754 minutes, with a 4,368-minute single outage in the same year.

Perhaps unsurprisingly, K-Electric earned a net profit of Rs16.28bn during July-March 2014-15.

The writer is a former chairman of the State Engineering Corporation, Ministry of Industries and Production

Published in Dawn, Economic & Business, July 27th, 2015

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